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Home My WebLink AboutFY 2024 Annual Comprehensive Financial ReportANNUAL COMPREHENSIVE FINANCIAL Otay Water District Fiscal Year Ended 2024 REPORT Otay Water District Annual Comprehensive Financial Report for the Fiscal Year Ended June 30, 2024 BOARD OF DIRECTORS Jose Lopez, Division 4 President Ryan Keyes, Division 2 Vice President Mark Robak, Division 5 Treasurer Francisco X. Rivera, Division 1 Gary Croucher, Division 3 DISTRICT FINANCIAL MANAGEMENT Jose Martinez General Manager Joseph R. Beachem Chief Financial Officer Kevin Koeppen Assistant Chief, Finance PREPARED BY Finance Department Otay Water District, Spring Valley, California This page intentionally left blank Table of Contents Introductory Section Letter of Transmittal……………………………………………………………………………………………………………………………………. iii Organization Chart…………………………………………………………………………………………...………………………………………… xiv List of Principal Officials…………………………………………………………………………………………………...……………………….. xv GFOA Certificate of Achievement……………………………………………………………………………………………...……………. xvi Financial Section Independent Auditors’ Report………………………………………………………………………………………………………...………..… 1 Management’s Discussion & Analysis…………………………………………………...…………………………………...………….. 4 Basic Financial Statements: Statements of Net Position..…………………………………………………………………………………………………………...….….. 15 Statements of Revenues, Expenses, and Changes in Net Position………….…………………………...…… 17 Statements of Cash Flows……………………………………………………………….…………………………………………………...….. 18 Notes to Financial Statements………………………………………………………………………………………………………………... 20 Required Supplementary Information: Schedule of Changes in the Net OPEB Liability and Related Ratios for Measurement Periods Ended June 30, ……………………………………………………………………………………………………………………….. 67 Schedule of Contributions for Fiscal Year Ended June 30, ……………………………………………………………. 68 Schedule of Changes in the Net Pension Liability and Related Ratios for Fiscal Year Ended June 30, ………………………………………………………….………………………………………………………………………………………... 69 Schedule of Plan Contributions for Fiscal Year Ended June 30, ..…………………………………………………. 71 Statistical Section Net Position by Component…………………………………………………………………………………………………………………….. 74 Net Investment in Capital Assets…………………….………………………………………………………………….………………..… 75 Changes in Net Position………………………………………………………………..………………………………………………………….. 76 Operating Revenues by Source…………………………………………………………………………………………….……………….. 77 Operating Expenses by Function………………………………………………………..…………………………………………………. 78 Non-Operating Revenues by Source……………………………………………………………………………………………………. 79 Non-Operating Expenses by Function………………………………………………………………………………………………. 80 Assessed Valuation of Taxable Property within the District…………………………………………………………. 81 Water Purchases, Production, and Sales……………………………………………...………………………….…………………. 82 Meter Sales by Type…………………………………………………………………….……………………………………………………………. 83 Number of Customers by Service Type……………………………………………………………………………………………….. 84 Property Tax Levies and Collections…………………………………………………………………………………………………….. 85 Water Fixed Rates ……….………………………………………………………………………………………………………………………….…. 86 Water Variable Rates…….…………………………………………………………………………………………………………………………... 89 Sewer Variable and Fixed Rates…….………………………………………………………………………..…………………………….. 90 Ten Largest Customers…………………………………………………………………………………………………………………………….. 91 Ratios of Outstanding Debt by Type…………………………………………………….……………………………………………….. 92 Pledged Revenue Coverage (Water)……………………………………………………………………………………………………. 93 Pledged Revenue Coverage (Wastewater)…………………………………………………………………………………………. 94 Ratios of General Bonded Debt Outstanding………………………………………………………………….………………..… 95 Computation of Direct and Overlapping Bonded Debt………………………………………………………………… 96 Principal Employers…………………………..……………………………………….......................................................……………….. 98 Demographic and Economic Statistics……………………………………………………………………………………………….. 99 Number of Employees by Function………………………………………………………………………………………………………. 100 Active Meters by Size………………………………………………………………..………………………………………………………………. 101 Operating and Capital Indicators…………………………………………………………………………………………………………... 102 i This page intentionally left blank ii October 25, 2024 Honorable Board of Directors Citizens of the Otay Water District We are pleased to present the Otay Water District's (District) Annual Comprehensive Financial Report for the fiscal year ended June 30, 2024. This report was prepared by the District's Finance Department following guidelines set forth by the Government Accounting Standards Board (GASB) and generally accepted accounting principles (GAAP). Responsibility for the accuracy of the data presented and the completeness and fairness of the presentation, including all disclosures, rests with the District's management. We believe the data, as presented, is accurate in all material respects and that it is presented in a manner that provides a fair representation of the financial position and results of the District's operations. Included are all disclosures we believe necessary to enhance your understanding of the financial condition of the District. GAAP requires that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management's Discussion and Analysis (MD&A), which should be read in conjunction with this report. The District's MD&A can be found immediately following the Independent Auditors' Report. Davis Farr LLP, a firm of licensed certified public accountants, audited the District's financial statements. The goal of the independent audit was to provide reasonable assurance that the financial statements of the District for the fiscal year ended June 30, 2024, are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. In the independent auditors' opinion, the following financial statements present fairly, in all material respects, the respective financial position of the District as of June 30, 2024, and are presented in conformity with GAAP. The Independent Auditors' Report is presented as the first component of the financial section of this report. REPORTING ENTITY The District is a publicly owned water and sewer agency, authorized on January 27, 1956, as a California special district by the State Legislature, with an entitlement to import water under the Municipal Water District Act 1911. Its ordinances, policies, taxes, and service rates are set by five Directors, elected by voters in their respective geographic divisions, to serve staggered four-year terms on its Governing Board. The District is a not-for-profit public agency that provides water service to the community. As a governmental entity, the District does not make a profit from providing water service iii and cannot operate at a loss. The District also performs cost of service studies to ensure that each end-user pays only their proportionate share of the District's costs of water acquisitions, construction, operation, maintenance, betterment, renewal, and replacement of the public water and sewer facilities. The General Manager reports directly to the Board of Directors and oversees day-to-day operations of Administrative Services, Finance, Water Operations, and Engineering through the four District Chiefs. These and other lines of reporting are shown on the organization chart on page xiv. Over the last 68 years, the District has grown from a handful of customers and two employees to become an organization operating a network of more than 927 miles of pipelines, 44 operational reservoirs, a recycled water facility, and one of the largest recycled water distribution networks in the State of California. The service area's character has also changed from predominantly dry-land farming and cattle ranching to businesses, high-tech industries, and large master-planned communities. Today the District provides water service to approximately 51,853 potable and 798 recycled customers within 125 square miles of the southeastern San Diego metropolitan area. The District purchases all potable water sold to its customers from the San Diego County Water Authority (CWA). The CWA purchases much of this water from the region's primary water importer, the Metropolitan Water District of Southern California (MWD), and the Imperial Irrigation District. In December 2015, the Claude "Bud" Lewis Carlsbad Desalination Plant began delivering water to the region. The District also entered into an agreement with the CWA that brought regional water treatment closer to our customers and helped reduce dependence on water treatment facilities located outside of San Diego County. In 2010, the District constructed two 10-million-gallon reservoirs and a 5.1-mile, 36-inch diameter pipeline to receive locally treated potable water from Helix Water District's R.M. Levy Water Treatment Plant and convey it to customers. The District also owns and operates a wastewater collection and recycling system providing public sewer service to approximately 4,739 customer accounts within portions of the communities of La Mesa, Rancho San Diego, El Cajon, Jamul, and Spring Valley. Wastewater collected is conveyed to the District's Ralph W. Chapman Water Reclamation Facility, capable of recycling wastewater at a rate of 1.3 million gallons per day. The District also can purchase up to 6 million gallons per day of recycled water from the City of San Diego's South Bay Water Reclamation Plant. The District uses the recycled water from these two sources to irrigate eastern Chula Vista schools, public parks, roadway landscapes, a golf course, and various other approved uses per California Code of Regulations, Title 22. The use of recycled water reduces dependency on imported supplies and provides a local supply, thereby diversifying District resources. iv MISSION, CURRENT ECONOMIC CONDITIONS, AND OUTLOOK The District's mission is to provide high quality and reliable water and wastewater services to the Otay Water District customers in a professional, effective, and efficient manner. The District's Public Services Division saw a moderate decrease in the recent year, approving an average of 43.6 permits per month and selling 193 water meters during fiscal year 2024, compared to 222 water meters in fiscal year 2023. As of July 2023, it is estimated that the District served approximately 240,290 residents. The San Diego Association of Governments (SANDAG), the regional planning agency, has estimated the District's average long-term growth of 0.22%. The District expects nominal growth in the customer base of 1.0% for Fiscal Year 2025 and projects an ultimate customer population of 271,500 residents by 2055. LEGISLATIVE AND REGULATORY ISSUES The District continues to monitor legislative and regulatory activity and how it could impact the District and its customers. For the 2024 legislative session, the legislature passed 1,206 of 2,159 bills introduced and sent those to Governor Gavin Newsom for consideration. The Governor signed 1,017 and vetoed 189 by the September 30, 2024 deadline. Affordability has been one of the top priorities for the District and other retail water agencies throughout the state. Therefore, public water agencies introduced a trio of bills during this legislative session to protect water rates and service-related fees and charges against costly Proposition 218 litigation by high water users. All three bills were signed into law by the Governor. The primary legislative activity and achievement for the District and its legislative consultant has been its sponsorship of Senate Bill 1072 (Padilla), which provides that if a court determines that a fee or charge for a property-related service violates Proposition 218, then the local agency must credit that amount against the cost of providing the property related service, as opposed to providing a refund. The District also supported two other Proposition 218 bills that passed. The first was the Association of California Water Agencies (ACWA)-sponsored AB 2257 (Wilson), which creates an exhaustion of administrative remedies procedure that, if a local agency chooses to implement it, requires ratepayers to bring an objection regarding a Proposition 218 proposed property-related water or sewer fee or charge, prior to specified deadlines. The second one was AB 1827 (Papan), which provides that fees or charges for Proposition 218 property-related water service imposed or increased pursuant to the California Constitution may include the incrementally higher costs of water service peaking factors. The District also monitored SB 1255 (Durazo), which would have required retail suppliers that serve more than 3,300 residential connections to establish an opt-out water-rate assistance program for ratepayers to make a voluntary contribution to those who need financial assistance. ACWA opposed and proposed amendments for an opt-in program; otherwise, many ratepayers would end up paying voluntary contributions without their knowledge by not reviewing their water bills, resulting in public distrust of the agencies and refund requests that would increase administrative costs and, therefore, limiting funding for the program itself. Due to coordinated opposition, the bill failed to make it out of the Assembly Appropriations Committee’s suspense file. v Related to affordability at the federal level, United States Senator Alex Padilla introduced S.3830, which would establish a permanent, nationwide water assistance program modeled after the current program to authorize grants to states, territories, and tribes to assist low-income households in paying arrearages and other rates charged to such households for drinking water or wastewater services. This would provide technical assistance to rural, tribal, and underserved owners or operators of public water systems or treatment works; align income eligibility with the Low-Income Household Energy Assistance Program, Temporary Assistance for Needy Families, Supplemental Nutrition Assistance Program, Supplemental Security Income, and means-tested veterans’ programs; and transfer authority of the program from Health and Human Services to the U.S. Environmental Protection Agency upon completion of the Rural and Low-Income Water Assistance Pilot Program authorized in the Bipartisan Infrastructure Law. The bill is still pending in the Senate. Representative Pat Fallon (R-TX) and Representative Brittany Pettersen (D-CO) introduced H.R.7525, which requires federal agencies to recognize special districts as local government for the purpose of federal financial assistance determinations and codifies in federal law a first-ever formal definition of "special district.” The bill passed the House and is pending in the Senate. Following the successful House passage of H.R.7525 in May 2024, U.S. Senators Kyrsten Sinema (I-AZ) and John Cornyn (R- TX) introduced a companion version of the Special District Grant Accessibility Act (SDGAA – S.4673), which is pending action. The District also tracked two bills from a package of highly controversial bills intended to “modernize” the state’s water rights system. ACWA was engaged in these bills as well. The first is AB 1337 (Wicks), which would have given authority to the State Water Resources Control Board (SWRCB) to adopt sweeping curtailment regulations for water conservation purposes to prevent waste, unreasonable use, or unreasonable water diversion methods. This bill failed in the legislative process. The second bill, AB 460 (Bauer-Kahan), was signed into law and authorizes the SWRCB to issue an interim relief order on water rights. ACWA removed opposition due to amendments that removed problematic provisions related to regulatory and enforcement issues and raised penalties for illegal diversions instead. The District also joined ACWA’s coalition in support of a $7.85 billion bond investment in water infrastructure for recycled water, groundwater recharge, storage, flood protection, dam safety, conveyance, storage, safe drinking water, water quality, regional watershed resilience, State Water Project improvements, and water conservation. Although three water-related bond measures were introduced during last year’s session, they were held until this year as the Governor’s focus for this year’s primary election is on his mental health initiative. Only two bond measures were passed by the legislature and placed on the November ballot, with one being a climate and resources bond, Proposition 4. ACWA adopted a “Watch” (neutral) position as they sought two-thirds of the overall $10 billion amount to be for water but ended up with less than one-third with minimal investments in critical categories. The proposed climate bond supplements the cuts made to the general fund budget. Upon the April 2023 adoption of the California Air Resources Board’s (CARB) Advanced Clean Fleets Regulations, which the District provided written and spoken comments on, the District has continued vi to monitor the implementation of the regulations, including how CARB is implementing AB 1594 (Garcia, 2023), which the District supported last year to provide greater flexibility for utilities regarding the rule. The latest proposed amendments from an October 3, 2024 workshop included the following: 1) definition added for “traditional utility-specialized vehicle” for public agencies (including Class 3-8 vehicles) to be applied to the Zero Emissions Vehicles (ZEV) Purchase Exemption and Daily Usage Exemption; 2) specifies early access (less than 13 years to retire the vehicle); and 3) adds criteria of usage data by vehicle class (mileage and hours of operation thresholds) that provide “early” access to the Daily Usage Exemption and ZEV Purchase Exemption. Based on the proposed amendments, CARB has affirmed that the addition of the “traditional utility-specialized” vehicles definition and provisions entails that public fleets can avoid the 13-year requirement that applies to the ZEV Purchase Exemption and Daily Usage Exemption pathways by submitting a vehicle purchase plan or demonstrating that an agency’s existing fleet vehicle exceeds the mileage/usage thresholds identified. CARB has also clarified how they will review exemption requests made during 2024-2026 as agencies contend with the 50% new purchase requirement. Internal Combustion Engine (ICE) vehicles in the purchase list will not be a separate category from 50/50 purchases. They will likely evaluate requests for an exemption based on an agency’s current vehicle purchases for the year and if any of their ICE purchases could have been made to purchase ZEVs. The District has also been monitoring water quality regulatory developments at the SWRCB. In March 2023, the SWRCB adopted a resolution for drinking water regulations development for the remainder of that calendar year and moving forward. This includes minimum contaminant levels (MCLs) for Chromium (hexavalent), Arsenic, Perfluoro-octanoic acid (PFOA), perfluoro-octane sulfonic acid (PFOS), N-nitroso dimethylamine (NDMA), Disinfection Byproducts, Styrene, Cadmium, and Mercury. The SWRCB continues to work through adopting these various proposed MCLs, having adopted the Hexavalent Chromium MCL of 10 parts per billion (ppb) earlier this year, which took effect on October 1, 2024. On April 10, 2024, the USEPA announced a new national MCL of 4 parts per trillion (ppt) for PFOA and PFOS as individual contaminants and a standard of 10 ppt for three other chemicals. This enforceable rule requires public water systems to monitor for these PFAS, notify the public of the PFAS levels, and reduce their levels in drinking water if they exceed the MCL. Public agencies have five years to come into compliance. ACWA considers these MCLs to be infeasible because the anticipated costs of complying are not adequately captured under EPA’s cost assessment. Furthermore, on April 5, 2024, the California Office of Environmental Health and Hazard Assessment adopted public health goals of 0.007 ppt for PFOA and 1.0 ppt for PFOS. A public health goal is a drinking water objective that does not pose a significant health risk. It is not enforceable but is the basis for developing maximum contaminant levels. On October 8, 2024, the USEPA announced its final rule on lead and copper concerning drinking water. Drinking water systems will have 10 years to identify and remove all lead pipes in their respective systems. The rules require additional testing of drinking water supplies and lowers action vii thresholds, requires more communications at the community level, and comes with an announcement of $2.6 billion companion funding for lead pipe replacements through the Drinking Water State Revolving Fund and at least $15 billion through the Biden-Harris Bipartisan Infrastructure Act. The USEPA will be offering webinars over the next few months to help drinking water utilities understand the new rule. The SWRCB and many water agencies, including the District, continue to focus on conservation- related laws such as SB 1157 (Hertzberg, 2022), which lowered the indoor residential water-use standard. The bill established the indoor residential water-use standards to be as follows: 55 gallons per capita per day (GPCD) until January 1, 2025; 47 GPCD until January 1, 2030; and 42 GPCD as of January 1, 2030. The District is currently projected to meet the GPCD requirements. SB 1157 supersedes SB 606 and AB 1668, which passed in 2018 to build on efforts to make water conservation a way of life and better prepare the state for droughts and climate change. The District and other water agencies throughout the state have worked with state officials to define how the conservation laws will be implemented. These laws provide a framework to help other urban water suppliers, including the District, set water-use targets. They also required the SWRCB to adopt an outdoor water-use standard by June 2022. In collaboration with other water agencies and industry associations, the District actively engaged with the SWRCB to ensure that the regulations were both equitable and reflective of local conditions. Following a critical report by the Legislative Analyst’s Office in January 2024, which deemed the proposed regulations "costly and difficult to achieve," SWRCB staff revised the standards. The less stringent guidelines reduced the number of suppliers required to make large cuts of more than 20% and extended the timeline for water-use reductions to 2040. On July 3, 2024, the SWRCB unanimously adopted the new regulations, which will take effect in 2025. The District will continue its efforts as the SWRCB releases additional recommendations and draft regulations. In a related development, the Governor ended the drought state of emergency in September 2024 for 19 counties where conditions have improved significantly, while keeping it in place for the remaining 39 counties. The lifted emergency covers areas such as Imperial, Inyo, Los Angeles, Marin, and San Diego, while other regions continue to face challenges with local water supplies and ongoing recovery efforts. Another regulatory issue that District staff has been engaged in is the SWRCB’s approval of the final draft of the Cross Connection Control Policy Handbook in December 2023. This handbook will replace portions of Title 17 that address cross-connection and backflow regulations. The District must provide a Cross Connection Control Plan to the SWRCB by July 1, 2025. District staff provided comments on portions of the handbook that will result in increased workload for the District and additional costs to customers. On December 8, 2023, the Department of Water Resources (DWR) released the Final Environmental Impact Report (EIR) for the proposed Delta Conveyance Project (DCP), advancing an essential piece of the state’s strategy to protect water access for millions of Californians. It was redesigned following public input and Governor Newsom’s pledge of rightsizing the project to one tunnel to better support viii both environmental and water supply needs. DWR approved the project on December 21, 2023 and released a benefit-cost analysis in mid-May 2024. The project, however, is facing litigation by opponents. On June 20, 2024, the Sacramento County Superior Court halted DWR from undertaking further geotechnical investigations implementing the DCP until DWR files a certification of consistency with the Delta Stewardship Council as required under the Sacramento-San Joaquin Delta Reform Act of 2009. DWR posted a draft certification of consistency for the 2024-2026 Proposed Geotechnical Activities proposed action. On August 1, 2024, the SWCRB released a notice of public hearing regarding the DCP. The hearing, set for January 16, 2025, will address DWR’s water right change petitions to add new points of diversion and re-diversion to the water rights of the State Water Project (SWP), whether to approve the petitions and what terms and conditions to include in the amended permits. On September 17, 2024 the State Water Board released a Notice of Pre-Hearing Conference and Procedural Ruling for October 17 regarding DWR’s pending Petitions for Change of Water Rights Permits associated with the SWP. The prehearing conference will address DWR’s withdrawal of the petitions for water rights extension of time and request to amend the change petitions. FISCAL YEAR 2023-2026 STRATEGIC PLAN The strategic plan details our commitment to remain a model public agency that maintains stakeholder trust through fiscal responsibility, environmental stewardship, and effective leadership. Since 1956 the District's theme has been and continues to be "Dedicated to Community Service." This motto serves as a great reminder for our staff of the responsibility and significance of delivering exceptional service to the residents and businesses in our community. Over the years the District’s strategic plan has evolved from one focused on growth to one focusing on consistent, albeit lower, growth levels, long-term operations, and capital maintenance needs of the District. The District’s current strategic plan (FY 2023-2026), adopted by the Board in January 2022, highlights areas of focus, including a stronger emphasis on financial and long-term demands, legislative matters, aging workforce and knowledge transfer, organizational culture, customer service, cybersecurity, and asset management. Quarterly and annual performance metrics support short-term and long-term objectives linked to these strategies to promote and track continuous improvement. The plan reinforces the Board’s vision, mission, and value statements and the business perspectives that serve as the foundation for the new strategies, goals, and objectives. The strategic plan addresses several challenges facing the District today. They include fulfilling more stringent water quality requirements, meeting the water demands of a developing community, discovering methods to better use our current water resources through storage and water conservation, retention and recruitment of a skilled workforce, and maintaining an adaptable organization to meet future challenges. The strategic plan allows us to also convey our plans to our customers, other agencies, and water regulators. As with past plans, we are confident that this plan will help us to successfully implement the Board’s direction. ix As the District's infrastructure ages, there will be increasing financial pressure to meet the costs of replacing infrastructure. To mitigate these pressures, the management team continues to prioritize efficiency inside the agency via investments in operational and business technologies to optimize an efficient workforce. Through community focus, sound planning, preparation, and fiscal management, and a prepared and adaptable work culture, the District is well positioned to support its growing customer base while sustaining the quality water service that our community and our ratepayers expect. These high-level strategic objectives are further articulated within the current Strategic Plan, outlining District-wide accountability, and performance metrics to measure and improve outcomes. The success of this approach is proven by the District’s gains in productivity and reduction in staffing while service growth continues. The District has reduced staffing by 28.75 full-time equivalent positions, or 16%, while the number of customer accounts increased by 4,989, or 9% from 2007 through 2025. The District’s Other Post-Employment Benefit (OPEB) plan is 74% funded as of June 30, 2023, which is an 11% decline from the previous 85% funding status as of June 30, 2022. The reduced funding level is similarly a result of lower than expected investment returns in 2022 as well as a 15% increase in medical costs that was effective January 1, 2024. The District will continue its strategy of advance funding its unfunded pension and OPEB obligations. On June 5, 2024 the Board adopted the 2024- 2027 Memorandum of Understanding between the Otay Water District and the Otay Water District Employee's Association (MOU). The terms of the MOU include the closure of the OPEB defined benefit plan to new members after September 1, 2024. The MOU provides employees hired subsequent to September 1, 2024 with eligibility for a defined contribution Health Reimbursement Arrangement. The FY 2025 budget includes a $350 thousand advance contribution to its defined benefit programs. Staff is also recommending to return the advanced funding amount to the $1.3 million level over the next six years. The strategy of advance funding the District’s unfunded obligations aims to reduce the District’s highest cost debt. This strategy is aimed to save the ratepayers money and will save the District approximately $5.5 million over the 12-year advance funding period, which began in 2021. Other cost savings include the reduction in number of vehicles and equipment, fuel consumption, pavement costs, and decreasing water loss through the successful leak detection and repair program. Staff continues to seek out other operational efficiencies, thus decreasing costs and minimizing rate impacts on District customers. Based on an annual survey of water and sewer rates conducted by staff, the District has the eleventh lowest water rates of 22 agencies, and fourth lowest sewer rates of 28 agencies in the region. BUDGETING CONTROLS The District views the budget as an essential tool for proper financial management, which is adopted before each fiscal year. The budget is developed by combining the District's strategic objectives and measures with input from the organization's various departments. The budget becomes a direct x reflection of the District's strategic plan by incorporating these strategic measures and objectives. The budget is designed and presented for the general needs of the District, its staff, and its customers. It is a comprehensive and balanced financial plan that features District services, resources and allocation, financial policies, strategic objectives, and other useful information that allows the users to understand the District's financial status and future. The District monitors performance monthly by generating comparative reports of budget to actual and distributing them to all department heads, with top-level information provided to the Board at the monthly board meetings. BUDGET SUMMARY The District's operating expenditures consist of three major sectors: potable water, recycled water, and wastewater. The total operating budget is $138,093,000 for Fiscal Year 2025. Revenues from potable and recycled water sales are projected to be $121,112,000, about $9,257,000 (8.3%) higher than the Fiscal Year 2024 budget. Water sales volumes are expected to decrease by 0.9% versus Fiscal Year 2024 budget. The MWD and CWA water supply rates are increasing 20.0% in Fiscal Year 2025 due to the high cost of supply programs, higher energy costs, and increasing operating costs. District staff projects wastewater revenues to be $3,482,000, approximately $14,000 more than the Fiscal Year 2024. The remaining budgeted revenues of $13.5 million come from various special fees, assessments, and non-operating revenues. An overall rate increase of 12.8% for potable water, 5.3% for recycled water, and 4.8% for wastewater has been budgeted for January 1, 2025. The 2024-25 Capital Improvement Program (CIP) budget consists of 134 projects and a $16.0 million budget. This year’s six-year CIP budget increased by $22.7 million from $148.0 million to $170.7 million. The CIP budget emphasizes long-term planning for ongoing programs to meet population growth, facilities replacement, and betterment of infrastructure while functioning within fiscal constraints. THE FUTURE The District continues its commitment to diversify water resources, reducing dependence on traditional water supplies from the Colorado River and the Sacramento-San Joaquin Bay-Delta. The coming years will continue to pose challenges for those in California’s water community. Potable sales volumes experienced a slight increase of 0.3% in fiscal year 2024 compared to fiscal year 2023 levels. The District projects a 0.9% decrease in water sales volume in Fiscal Year 2025 compared to the previous year’s budget and a decrease of 6.0% versus FY 2024 actual sales volume. SAN DIEGO COUNTY WATER SUPPLY San Diego County imports about 72% of its water from the Colorado River and Northern California. Since these sources face legal and environmental constraints, the region has been exploring other ways to ensure an adequate water supply, including increased water recycling, incorporating water- use efficiency and conservation programs as a way of life, increased water storage, and groundwater, and seawater desalination. xi CAPITAL IMPROVEMENT PROGRAM (CIP) To ensure a reliable water supply and sewer system for the future, including sustaining the current infrastructure, the District has developed several future planning documents, which provide a guide to defining the District's proposed projects. The major projects planned for delivery over the next six fiscal years include: Pipeline Replacement Projects (10 Total) Reservoir Construction or Rehabilitation Projects Meter Replacement Pump Station Replacement and Rehabilitation Vehicles Reservoir Coatings Valve Replacement RWCWRF Treatment ACCOUNTING SYSTEM The Finance Department is responsible for providing financial services to the District, including financial accounting, debt management, reporting, payroll, and accounts payable; investment of funds, billing and collection of water and wastewater charges; taxes; and other revenues. The District's books and records are maintained on an enterprise basis, matching revenues against the costs of providing services. Revenues and expenses are recorded on an accrual basis when revenues are earned, and expenses are incurred. INTERNAL CONTROLS The District operates within a system of internal controls established and periodically reviewed by management. This provides reasonable assurance that assets are adequately safeguarded, and transactions are recorded correctly according to District policies and procedures. When establishing or reviewing controls, management must also consider the cost of the control and its value derived from its utilization. Management maintains and implements all sensitive controls and those controls whose value adequately exceeds their cost. Management believes the District's internal controls, procedures, and policies adequately safeguard assets and provide reasonable assurance of proper recording of financial transactions. In addition, the District maintains controls to provide for compliance with all finance-related legal and contractual provisions. Management believes the activities reported within the presented Annual Comprehensive Financial Report comply with these finances related legal and contractual provisions, including bond covenants and fiduciary responsibilities. xii AWARDS AND ACKNOWLEDGMENTS The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to Otay Water District for its Annual Comprehensive Financial Report for the fiscal year ended June 30, 2023. To earn a Certificate of Achievement, a government agency must publish an easily readable and efficiently organized Annual Comprehensive Financial Report. This report must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for one year only. Staff believes that the District's current Annual Comprehensive Financial Report continues to meet the Certificate of Achievement Program's requirements and is submitting it to the GFOA to determine its eligibility for another certificate. In addition to the Certificate of Achievement for Excellence in Financial Reporting, the District has received the following awards: The Government Finance Officers Association of the United States and Canada presented a Distinguished Budget Presentation Award to Otay Water District for its annual budget for the Fiscal Year 2023-2024. To achieve this award, a governmental unit must publish a budget document that meets program criteria as a policy document, an operations guide, a financial plan, and a communications device. The California Society of Municipal Finance Officers presented the District with the Certificate of Award for Excellence in Operating Budgeting for Fiscal Year 2023-2024. The California Society of Municipal Finance Officers presented the District with the Certificate of Award for Excellence in Capital Budgeting for Fiscal Year 2023-2024. We want to thank all the staff involved for their efforts to prepare this Annual Comprehensive Financial Report and their hard work to ensure a successful outcome. We would also like to thank the firm Davis Farr LLP for their professional work and opinion. To the Board of Directors, we acknowledge and appreciate the Board's continued support and direction in achieving excellence in financial management. Joseph R. Beachem Chief Financial Officer Jose Martinez General Manager xiii Organization Chart District Position Count – (144 Positions) Citizens and Customers Board of Directors General Manager (4) Safety and Security Administration Purchasing and Facilities Controller and Budgetary Services Treasury and Accounting Services Customer Service Meter Services Water System Operations Utility Maintenance/ Construction Water Resources, Planning, Design and Environmental Administrative Services (23) Human Resources Information Technology and Geographic Information System Finance (31) Strategic Planning Public Services and Field Services Engineering (29) Water Operations (57) Collection, Treatment, and Reclamation Operations District Secretary General Counsel Public Information Conservation xiv List of Principal Officials Mark Robak Treasurer Division 5 Jose Lopez President Division 4 Ryan Keyes Vice President Division 2 Francisco X. Rivera Division 1 Board of Directors The Otay Water District is a revenue- neutral public agency established in accordance with the California Water Code. This not-for-profit status means Otay has no private shareholders, pays no dividends and therefore does not report to, nor answer to the California Public Utilities Commission. The District does, however, answer to the public through a five-member Board of Directors. Each Director is elected by voters within their respective division boundaries to represent the public's interest with regard to rates for service, taxes, policies, ordinances, and other matters related to the management and operation of the Otay Water District. Directors serve four- year alternating terms on the Board. Gary Croucher Division 3 Mission Statement To provide exceptional water and wastewater service to its customers, and to manage District resources in a transparent and fiscally responsible manner. xv GFOA CERTIFICATE OF ACHIEVEMENT FOR EXCELLENCE IN FINANCIAL REPORTING The Government Finance Officers Association (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the Otay Water District for its Annual Comprehensive Financial Report for the fiscal year ended June 30, 2023. This is the nineteenth year that the District has achieved this prestigious award. In order to be awarded a Certificate of Achievement, the District had to publish an easily readable and comprehensive report. This report must satisfy both Generally Accepted Accounting Principles (GAAP) and applicable legal requirements. This award is valid for a period of one year only. We believe our current Annual Comprehensive Financial Report continues to meet the Certificate of Achievement Program’s requirements, and will be submitting it to GFOA to determine its eligibility for another certificate. xvi Independent Auditor’s Report Board of Directors Otay Water District Spring Valley,California Report on the Audit of the Financial Statements Opinion We have audited the financial statements of the Otay Water District (District), as of and for the year ended June 30, 2024 and the related notes to the financial statements, which collectively comprise the District’s basic financial statements as listed in the table of contents. In our opinion,the accompanying financial statements present fairly,in all material respects, the respective financial position of the District as of June 30,2024,and the respective changes in financial position and cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Basis for Opinion We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS)and the standards applicable to financial audits contained in Government Auditing Standards,issued by the Comptroller General of the United States.Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the District and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit.We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Responsibilities of Management for the Financial Statements The District’s management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements,management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the District’s ability to continue as a going concern for one year after the date that the financial statements are issued. 1 Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error,as fraud may involve collusion,forgery,intentional omissions,misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that,individually or in the aggregate,they would influence the judgment made by a reasonable user based on the financial statements. In performing an audit in accordance with GAAS,we: Exercise professional judgment and maintain professional skepticism throughout the audit. Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error,and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances,but not for the purpose of expressing an opinion on the effectiveness of the District’s internal control. Accordingly, no such opinion is expressed. Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management,as well as evaluate the overall presentation of the financial statements. Conclude whether,in our judgment,there are conditions or events,considered in the aggregate, that raise substantial doubt about the District’s ability to continue as a going concern for a reasonable period of time. We are required to communicate with those charged with governance regarding,among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control–related matters that we identified during the audit. Report on Summarized Comparative Information We have previously audited the District’s 2023 financial statements, and we expressed an unmodified audit opinion on those audited financial statements in our report dated October 25, 2023. In our opinion, the summarized comparative information presented herein as of and for the year ended June 30, 2023,is consistent, in all material respects, with the audited financial statements from which it has been derived. 2 Required Supplementary Information Accounting principles generally accepted in the United States of America require that the Management’s Discussion and Analysis, Schedule of Changes in the Net OPEB Liability and Related Ratios, Schedule of Contributions, Schedule of Changes in the Net Pension Liability and Related Ratios,and Schedule of Plan Contributions,be presented to supplement the basic financial statements.Such information is the responsibility of management and,although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America,which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries,the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Management is responsible for the other information included in the Annual Comprehensive Financial Report. The other information comprises the introductory section and statistical section but does not include the financial statements and our auditor's report thereon. Our opinions on the financial statements do not cover the other information, and we do not express an opinion or any form of assurance thereon. In connection with our audit of the financial statements,our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the financial statements, or the other information otherwise appears to be materially misstated.If,based on the work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated October 25, 2024 on our consideration of the District’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws,regulations,contracts,and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of internal control over financial reporting or on compliance.That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the District’s internal control over financial reporting and compliance. Irvine, California October 25,2024 3 Management’s Discussion and Analysis As the management of the Otay Water District (the "District"), we offer readers of the District's financial statements this narrative overview and an analysis of the District's financial performance during the fiscal year ending June 30, 2024. Please read it in conjunction with the District's financial statements that follow Management's Discussion and Analysis. All amounts, unless otherwise indicated, are expressed in millions of dollars. Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the District's basic financial statements, which are comprised of the following: 1) Statement of Net Position, 2) Statement of Revenues, Expenses, and Changes in Net Position, 3) Statement of Cash Flows, and 4) Notes to the Financial Statements. This report also contains supplementary information in addition to the basic financial statements. The Statement of Net Position presents information on the District's assets, deferred outflows of resources, liabilities, and deferred inflows of resources, with the difference reported as Total Net Position. Over time, increases or decreases in net position may serve as a valuable indicator of whether the District's financial position is improving or weakening. The Statement of Revenues, Expenses, and Changes in Net Position presents information showing how the District's net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation leave). The Statement of Cash Flows presents information on cash receipts and payments for the fiscal year. The Notes to the Financial Statements provide additional information essential to a complete understanding of the data supplied in the specific financial statements listed above. Financial Highlights The assets and deferred outflows of resources of the District exceeded its liabilities and deferred inflows of resources at the close of the most recent fiscal year by $404.3 million (net position). Of this amount, $61.5 million (unrestricted net position) may be used to meet the District’s ongoing obligations to residents and creditors. Total assets increased by $5.0 million, or 0.8%, during Fiscal Year 2024 to $624.8 million, due to increases in cash and investments, and accounts receivables, which were partially offset by a drop in capital assets due to depreciation exceeding current year additions. 4 Management’s Discussion and Analysis In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the District's progress in funding its obligation to provide retirement benefits to its employees. Financial Analysis: As noted, net position may serve, over time, as a valuable indicator of an entity's financial position. In the case of the District, assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by $404.3 million at the close of Fiscal Year 2024. The most significant portion of the District's net position, $336.1 million (83.1%), reflects its investment in capital assets, less any remaining outstanding debt used to acquire those capital assets. The District uses these capital assets to provide services to customers; consequently, these assets are not available for future spending. Although the District's investment in its capital assets is reported effectively as a resource, it should be noted that the resources needed to repay the debt must be provided from other sources since the capital assets themselves cannot be used to liquidate these liabilities. 5 Management’s Discussion and Analysis Statement of Net Position (In Millions of Dollars) 2024 2023 Assets Current and Other Assets $ 187.9 $ 176.3 Capital Assets 436.9 443.5 Total Assets 624.8 619.8 Deferred Outflows of Resources Deferred Actuarial Pension Costs 13.3 15.9 Deferred Actuarial OPEB Costs 12.2 6.7 Total Deferred Outflows of Resources 25.5 22.6 Liabilities Current Liabilities 36.4 34.6 Long-Term Debt Outstanding 95.0 95.0 Net Pension Liability 28.6 25.9 Net OPEB Liability 11.2 5.0 Other Liabilities 30.5 3.8 Total Liabilities 201.7 164.3 Deferred Inflows of Resources Deferred Inflows from Leases 43.4 45.4 Deferred Actuarial OPEB Costs 0.9 1.6 Total Deferred Inflows of Resources 44.3 47.0 Net Position Net Investment in Capital Assets 336.1 341.2 Restricted for Debt Service 3.6 3.5 Restricted for Capital Assets 3.1 3.0 Unrestricted 61.5 83.4 Total Net Position $ 404.3 $ 431.1 The District's operations and population are growing. Much of this expansion has occurred in the residential sector, particularly in multi-family dwellings. The District’s commercial base is also expanding, largely due to commercial development in the Otay Mesa area of the District’s service area, which borders Mexico. By 2055, the District's service area population is expected to increase by 13% to 271,500 residents. 6 Management’s Discussion and Analysis The District has created several future planning documents to ensure a reliable water supply and sewer system in the future, including the maintenance of current infrastructure. In FY 2024, the District's Capital Assets increased by $7.9 million before accumulated depreciation (see Note 4 in the Notes to Financial Statements). The District’s long-term debt (excluding current maturities) remains the same due to the addition of new Subscription-Based Technology Arrangements (SBITA), offset by the annual debt service payments (see Note 5 in the Notes to Financial Statements). Total liabilities increased by $37.4 million in FY 2024, primarily due to increases in Net Pension and OPEB liabilities, and accrued litigation. In FY 2024, deferred outflows of resources increased by $2.9 million due to increases in the actuarial pension and OPEB costs. Deferred inflows of resources decreased by $2.7 million in FY 2024 due to decreases in the actuarial OPEB costs and deferred inflows from leases. At the end of FY 2024, the District reports positive balances in all net position categories. This situation also applied to the prior fiscal year. 7 Management’s Discussion and Analysis Statement of Revenues, Expenses, and Changes in Net Position (In Millions of Dollars) 2024 2023 Water Sales $ 105.7 $ 99.9 Wastewater Revenue 3.5 3.3 Connection and Other Fees 3.3 3.0 Non-operating Revenues 16.9 14.6 Total Revenues 129.4 120.8 Depreciation Expense 18.3 17.9 Other Operating Expenses 113.0 100.9 Non-operating Expenses 32.4 4.8 Total Expenses 163.7 123.6 Income (Loss) Before Capital Contributions (34.3) (2.8) Capital Contributions 7.5 9.2 Change in Net Position (26.8) 6.4 Beginning Net Position 431.1 424.7 Ending Net Position $ 404.3 $ 431.1 Water Sales increased by $5.8 million in FY 2024 due to the increase in water rates necessary to pass through increasing costs placed on the District. Other Operating Expenses increased by $12.1 million in FY 2024, predominantly due to the increase in administrative and general expenses caused by increases in pension and OPEB costs and an increase in the cost of water. Non-operating expenses increased by $27.6 million due to the recognition of litigation expenses. Specific planning and environmental study costs associated with capital projects do not qualify as capital costs under Generally Accepted Accounting Principles. These costs are included in the District's miscellaneous (non-operating) expenses. For FY 2024, those expenses were $0.5 million. Connection and Other Fees increased by $0.3 million in FY 2024 due to an increase in expansion-related operating costs, which are funded by capacity fees. 8 Management’s Discussion and Analysis Capital Contributions decreased by $1.7 million in FY2024 due to less developer-built facilities. Non-operating Revenues Non-operating Revenues by Major Source (In Millions of Dollars) 2024 2023 Taxes and Assessments $ 5.8 $ 5.6 Rents and Leases 2.1 2.2 Other Non-operating Revenue 9.0 6.8 Total Non-operating Revenues $ 16.9 $ 14.6 The District's total non-operating revenues increased by $2.3 million in FY 2024 due primarily to the increase in investment earnings brought about by high interest rates. Capital Assets and Debt Administration The District's capital assets (net of accumulated depreciation) as of June 30, 2024, totaled $436.9 million. Included in this amount is land, which is a non-depreciable asset. The District's net capital assets decreased by 1.5% in FY 2024. 9 Management’s Discussion and Analysis Capital Assets (In Millions of Dollars) As indicated by the figures in the table above, most capital assets added during the current fiscal year are related to the water systems and Right to Use Assets. Additionally, most of the construction-in-progress cost is associated with water systems. Additional information on the District's capital assets can be found in Note 4 of the Notes to Financial Statements. On June 30, 2024, the District had $95.0 million in outstanding debt (net of $5.2 million of maturities occurring in FY 2025), which consisted of the following: Lease Payable $ 0.7 Subscription-Based IT Payable 4.9 Revenue Bonds 89.4 Total Long-Term Debt $ 95.0 Additional information on the District's long-term debt can be found in Note 5 of the Notes to Financial Statements. 2024 2023 Land $ 14.5 $ 14.5 Construction in Progress 10.7 11.7 Potable Water System 547.4 542.6 Recycled Water System 119.2 119.2 Wastewater System 59.3 59.4 Field Equipment 6.6 8.3 Buildings 19.3 19.7 Transportation Equipment 5.0 3.9 Communication Equipment 2.5 2.6 Office Equipment 8.0 8.1 Right to Use Assets – Leases 0.7 0.7 Right to Use Assets - SBITA 5.6 0.2 Total Capital Assets 798.8 790.9 Less Accumulated Depreciation (361.9) (347.4) Net Capital Assets $ 436.9 $ 443.5 10 Management’s Discussion and Analysis Fiscal Year 2024-2025 Budget Economic Factors The San Diego region imports 72.0% of its potable supply; therefore, factors such as local rainfall and weather conditions elsewhere in the western portion of the nation can affect the region. San Diego received above-average rainfall of 12.2 inches in FY 2024. The 10-year average of 10.7 inches for San Diego rainfall reflects the long-term drought conditions for our area. San Diego's rainfall average over 20 years is 9.9 inches, the 30-year average is 9.5 inches, and the 40-year average is 9.9 inches. While water sales peaked in 2008, prolonged droughts led to an increase in conservation, which has had a permanent influence on volumes. The FY 2025 sales volume is budgeted to decrease by 1.0% compared to the previous year's budget. The District continues to respond to the challenges presented by growth, State mandates, and drought, by creating new opportunities and new organizational efficiencies. Utilizing and refining its Strategic Business Plan has captured the Board of Directors' vision and united its staff in a joint mission. The District has achieved several significant accomplishments due to its successful adherence to its Strategic Business Plan. The District is poised to continue successfully providing an affordable, safe, and reliable water supply for the people of its service area, while also passing through the benefits of greater efficiencies and economies of scale. The District is currently at about 87.0% of its projected ultimate population, serving approximately 240,000 people. Long-term, this percentage should continue to increase as the District's service area develops and grows. By 2055, the District is projected to serve approximately 271,500 people. Currently, the District services the needs of this growing population by purchasing water from the San Diego County Water Authority (CWA), which in turn purchases its water from the Metropolitan Water District (MWD) and the Imperial Irrigation District (IID). Otay takes delivery of water through several connections of large-diameter pipelines owned and operated by CWA. The District receives treated water from CWA directly and from the Helix Water District via a CWA contract. Additionally, the District has an emergency agreement with the City of San Diego to purchase water in the case of a shutdown of the primary treated water source. The City of San Diego also has a long-term contract with the District to provide recycled water for landscape and irrigation usage. Through innovative agreements like these, both parties can benefit by using another agency's excess capacity and diversifying local supply, thereby increasing reliability. Following the July 2023 decision by the San Diego Local Agency Formation Commission (LAFCO) to approve the detachment request of Fallbrook Public Utility District (FPUD) and Rainbow Municipal Water District (RMWD) from CWA, CWA agreed to the separation in December 2023. The FPUD detachment was 11 Management’s Discussion and Analysis effective January 1, 2024, with an $8.5 million payment to CWA; RMWD is planned to separate in November 2024 paying $15.8 million to CWA under a payment plan. As part of the settlement agreement, both FPUD and RMWD have agreed to pay all costs related to the decommissioning of CWA facilities that will not be used post-detachment. After the detachment is completed, CWA will be composed of 22 member agencies. These detachments will put upward pressure on the District's future rates and charges as fixed CWA costs, that were previously paid by these parties, will be partially redirected to the District beginning in FY 2025, and the exit fees are projected to be insufficient to cover these fixed costs. Financial The District is budgeted to deliver approximately 27,296.2 acre-feet of potable water to 52,057 potable customer accounts during FY 2025. The FY 2025 budget was prepared with the continuing challenges of potable water wholesale supplier rate increases, inflation, additional CIP projects, increasing power costs, current and pending legislative initiatives, and climate change. Additional challenges include the costs associated with the City of San Diego’s Pure Water program and the County of San Diego’s rehabilitation of shared facilities. Inflation and increased regulation continue to significantly impact the District’s financial position. The District’s wholesale water supplier has approved a 14.0% overall rate increase in FY 2025, with projected increases of 16.4% in FY 2026 and 5.6% in FY 2027. The FY 2025 inflationary impact on material and administrative expenses is approximately $0.5 million, while the inflationary impact on the CIP is estimated to be $5.4 million over the six-year projection. SDG&E rate increases are expected to increase energy costs by 18.0%, resulting in a $0.8 million increase. Regulatory mandates are also adding pressure to both operating and CIP budgets, increasing material and administrative expense budgets by $0.8 million. Climate change presents another challenge for the District. Weather patterns today and in the future are projected to bring longer drought periods and less frequent, but more intense, rainfall periods. These prolonged drought periods result in increasing conservation requirements leading to permanent reductions in water consumption. The District partially mitigates inflationary impacts through increasing returns on investments and long- term contracts with pricing structures that are fixed for the duration of the contract or include pricing structures whereby annual price increases are for fixed dollar amounts that are less than CPI levels. The London Moeder Advisors' economic report suggests that while the County’s economy would continue to expand in 2024, the pace was anticipated to be consistent with the prior year in key metrics, including inflation, as supported by March 2024 CPI data. The six-year rate model assumes administrative and material inflation of 3.6% from FY 2025 through FY 2030. District staff projects that the District will sell another 906 water meters over the next six years, translating to 3,209 equivalent dwelling units (EDUs). This growth is estimated to increase sales volumes by an average 12 Management’s Discussion and Analysis of less than 1.0% per year over the next five years. While all these factors impact the region's water usage, people's water needs remain an underlying constant. Certain claims, suits, and complaints arising in the ordinary course of operation have been filed or are pending against the District. There is one case that could potentially have a significant effect on the District’s financial position. In November 2015, a District ratepayer filed a lawsuit against the District (Coziahr v. Otay Water District, Superior Court of the State of California, County of San Diego), contending that the District’s water rates violated Article XIIID of the California Constitution (“Proposition 218”). On March 4, 2021, the court issued a decision in favor of the plaintiffs, the District appealed the trial court’s decision to the Court of Appeal, and in July of 2024, the Court of Appeal issued its decision upholding much of the trial court’s decision, but remanding the issue of the allocation of refunds back to the trial court for a new trial. The matter has been remanded to the trial court for further proceedings as to the allocation of any refunds and for an award of attorneys’ fees. The estimated potential liability to the District, if the court were to award attorneys fees and damages, may be as high as $27,000,000 (“Estimated Potential Liability”). The District has accrued the Estimated Potential Liability, which has impacted the District’s net revenue for Fiscal Year 2023-24. The District expects to utilize reserves to fund the Estimated Potential Liability if and when due. However, because of the expense accrued for the Estimated Potential Liability, the debt service coverage ratio of the District’s outstanding Water Revenue Bonds from Taxes and Net Revenues will be negatively impacted for Fiscal Year 2023-24. The accrual of the Estimated Potential Liability has not affected the District’s ability to pay the installment payments or principal and interest due with respect to any of the District’s outstanding Water Revenue Bonds payable or its ability to comply with its covenants (and particularly its covenant with respect to rates and charges) related to the Water Revenue Bonds. Further, the District believes that the payment of the Estimated Potential Liability using its reserves will not have a material effect on the District’s financial condition, as the potential loss has already been incorporated into its financial projections. Nevertheless, the District may replenish some or all of those reserves with increases to rates. Management is unaware of any other conditions that are likely to have a significant impact on the District's current financial position, net position, or operating results. Contacting the District's Financial Management This financial report provides a general overview of the Otay Water District's finances for the Board of Directors, customers, creditors, and other interested parties. Questions concerning any information provided in the report or requests for additional information should be addressed to the District's Finance Department, 2554 Sweetwater Springs Blvd., Spring Valley, CA 91978-2004. 13 This page intentionally left blank 14 2024 2023 ASSETS Current Assets: Cash and Cash Equivalents (Notes 1 and 2)77,264,706$ 43,753,408$ Restricted Cash and Cash Equivalents (Notes 1 and 2)3,132,285 3,078,363 Investments (Notes 1 and 2)35,691,620 59,781,150 Restricted Investments (Notes 1 and 2)3,587,676 3,444,377 Accounts Receivable, Net 16,570,788 14,313,664 Accrued Interest Receivable 1,126,759 846,231 Taxes and Availability Charges Receivable, Net 287,785 305,094 Restricted Taxes and Availability Charges Receivable, Net 4,884 6,182 Current Lease Receivable (Note 12)1,041,530 962,482 Inventories 2,073,038 2,053,393 Prepaid Items and Other Receivables 1,885,417 1,501,252 Total Current Assets 142,666,488 130,045,596 Non-current Assets: Capital Assets (Note 4): Land 14,479,573 14,479,573 Construction in Progress 10,712,815 11,741,448 Capital Assets, Net of Depreciation 411,694,772 417,230,754 Lease Receivable (Note 12)45,228,436 46,270,266.00 Total Non-current Assets 482,115,596 489,722,041 Total Assets 624,782,084 619,767,637 DEFERRED OUTFLOWS OF RESOURCES Deferred Actuarial Pension Costs (Note 7)13,279,616 15,951,074 Deferred Actuarial OPEB Costs (Note 8)12,206,112 6,679,231 Total Deferred Outflows of Resources 25,485,728$ 22,630,305$ Continued STATEMENT OF NET POSITION June 30, 2024 (with comparative totals as of June 30, 2023) The accompanying notes are an integral part of this statement. 15 2024 2023 LIABILITIES Current Liabilities: Current Maturities of Long-term Debt (Note 5)5,224,677$ 5,589,735$ Accounts Payable 16,842,486 14,985,218 Accrued Payroll Liabilities 1,095,145 1,102,208 Other Accrued Liabilities 6,247,354 5,729,278 Customer and Developer Deposits 5,490,122 5,573,296 Accrued Interest 1,491,005 1,573,222 Total Current Liabilities 36,390,789 34,552,957 Non-current Liabilities: Long-term Debt (Note 5): Revenue Bonds 89,430,762 94,256,620 Lease Payable 671,758 690,539 Subscription-Based IT Payable (Note 5)4,914,393 35,476 Net Pension Liability (Note 7)28,553,945 25,951,095 Net OPEB Liability (Note 8)11,202,346 5,051,261 Other Non-current Liabilities (Note 9)30,548,589 3,768,468 Total Non-current Liabilities 165,321,793 129,753,459 Total Liabilities 201,712,582 164,306,416 DEFERRED INFLOWS OF RESOURCES Deferred Inflows from Leases (Note 11)43,410,817 45,442,359 Deferred Actuarial OPEB Costs (Note 8)870,274 1,574,138 Total Deferred Inflows of Resources 44,281,091 1,574,138 NET POSITION Net Investment in Capital Assets 336,050,508 341,227,728 Restricted for Debt Service 3,636,078 3,476,509 Restricted for Capital Assets 3,083,883 3,046,231 Unrestricted (Note 6)61,503,672 83,324,561 Total Net Position 404,274,141$ 431,075,029$ (with comparative totals as of June 30, 2023) STATEMENT OF NET POSITION June 30, 2024 The accompanying notes are an integral part of this statement. 16 Statements of Revenues, Expenses, and Changes in Net Position 2024 2023 OPERATING REVENUES Water Sales 105,736,843$ 99,901,174$ Wastewater Revenue 3,494,312 3,315,754 Connection and Other Fees 3,253,978 2,975,495 Total Operating Revenues 112,485,133 106,192,423 OPERATING EXPENSES Cost of Water Sales 77,807,009 71,342,741 Wastewater 2,400,881 2,497,316 Administrative and General 32,717,662 27,073,523 Depreciation 18,276,492 17,880,335 Total Operating Expenses 131,202,044 118,793,915 Operating Income (Loss)(18,716,911)(12,601,492) NON-OPERATING REVENUES (EXPENSES) Investment Earnings (Losses)6,393,523 4,088,331 Taxes and Assessments 5,777,012 5,618,253 Availability Charges 741,705 710,954 Gain (Loss) on Disposal of Capital Assets (725,060)(111,029) Rents and Leases 2,083,669 2,181,634 Miscellaneous Revenues 1,896,115 1,961,168 Donations (103,200)(92,000) Interest Expense (4,137,615)(4,310,352) Miscellaneous Expenses (27,478,412)(330,421) Total Non-operating Revenues (Expenses)(15,552,263)9,716,538 Income (Loss) Before Capital Contributions (34,269,174)(2,884,954) Capital Contributions 7,468,286 9,237,196 Change in Net Position (26,800,888)6,352,242 Total Net Position, Beginning 431,075,029 424,722,787 Total Net Position, Ending 404,274,141$ 431,075,029$ For the Years Ended June 30, 2024 and 2023 The accompanying notes are an integral part of this statement. 17 2024 2023 CASH FLOWS FROM OPERATING ACTIVITIES Receipts from Customers 106,875,559$ 105,268,572$ Receipts from Connections and Other Fees 3,253,978 2,975,495 Receipts from Property Rents and Leases 52,127 314,995 Other Receipts 1,128,578 1,178,333 Payments to Suppliers (80,512,055) (75,408,680) Payments to Employees (25,474,257) (25,602,901) Other Payments (581,612)(422,421) Net Cash Provided By (Used For) Operating Activities 4,742,318 8,303,393 CASH FLOWS FROM NONCAPITAL AND RELATED FINANCING ACTIVITIES Receipts from Taxes and Assessments 6,530,074 6,065,432 Net Cash Provided By (Used For) Noncapital and Related Financing Activities 6,530,074 6,065,432 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Proceeds from Capital Contributions 7,221,234 6,148,060 Proceeds from Sale of Capital Assets - 64,042 Proceeds from Property Rents and Leases 1,630,303 1,503,495 Proceeds from Debt Related Taxes and Assessments 7,250 245,063 Principal Payments on Long-Term Debt (5,452,872)(5,563,365) Interest Payments and Fees (3,814,672)(4,074,051) Acquisition and Construction of Capital Assets (6,690,118) (11,547,330) Net Cash Provided By (Used For) Capital and Related Financing Activities (7,098,875) (13,224,086) CASH FLOWS FROM INVESTING ACTIVITIES Interest Received on Investments 4,146,000 2,407,520 Proceeds from Sale and Maturities of Investments 40,339,069 7,600,000 Purchase of Investments (15,093,366) (55,085,244) Net Cash Provided By (Used For) Investing Activities 29,391,703 (45,077,724) Net Increase (Decrease) in Cash and Cash Equivalents 33,565,220 (43,932,985) Cash and Cash Equivalents - Beginning 46,831,771 90,764,756 Cash and Cash Equivalents - Ending 80,396,991$ 46,831,771$ Continued Statements of Cash Flows For the Years Ended June 30, 2024 and 2023 The accompanying notes are an integral part of this statement. 18 2024 2023 Reconciliation of Operating Income (Loss) to Net Cash Flows Provided By (Used For) Operating Activities: Operating Income (Loss)(18,716,911)$ (12,601,492)$ Adjustments to Reconcile Operating Income to Net Cash Provided By (Used For) Operating Activities: Depreciation 18,276,492 17,880,335 Receipts from Property Rents and Leases 52,127 314,995 Miscellaneous Revenues 1,128,578 1,178,333 Miscellaneous Expenses and Donations (581,612) (422,421) (Increase) Decrease in Accounts Receivable (2,257,125) 1,137,255 (Increase) Decrease in Inventory (19,645) (703,173) (Increase) Decrease in Prepaid Items and Other Receivables (384,165) 1,006,451 (Increase) Decrease in Net OPEB Asset 3,005,037 (Increase) Decrease in Deferred Actuarial Pension Costs 2,671,458 (11,469,305) (Increase) Decrease in Deferred Actuarial OPEB Costs (5,526,881) (3,601,175) Increase (Decrease) in Accounts Payable 1,857,268 (709,462) Increase (Decrease) in Accrued Payroll and Related Expenses (7,064) 124,034 Increase (Decrease) in Other Accrued Liabilities 518,076 755,494 Increase (Decrease) in Customer and Developer Deposits (98,472) 914,389 Increase (Decrease) in Other Non-current Liabilities (219,877) 64,236 Increase (Decrease) in Net OPEB Liability 6,151,085 5,051,261 Increase (Decrease) in Net Pension Liability 2,602,850 25,670,797 Increase (Decrease) in Deferred Actuarial Pension Costs (14,422,139) Increase (Decrease) in Deferred Actuarial OPEB Costs (703,864) (4,870,057) Net Cash Provided By (Used For) Operating Activities 4,742,318$ 8,303,393$ Schedule of Cash and Cash Equivalents: Current Assets: Cash and Cash Equivalents 77,264,706$ 43,753,408$ Restricted Cash and Cash Equivalents 3,132,285 3,078,363 Total Cash and Cash Equivalents 80,396,991$ 46,831,771$ Supplemental Disclosures Non-Cash Investing and Financing Activities Consisted of the Following: Contributed Capital for Water and Sewer System 247,052$ 3,089,136$ Change in Fair Value of Investments and Recognized Gains/Losses (1,299,473) (551,965) Amortization Related to Long-term Debt 377,676 460,484 Statements of Cash Flows - Continued For the Years Ended June 30, 2024 and 2023 The accompanying notes are an integral part of this statement. 19 Notes to Financial Statements Year Ended June 30, 2024 NOTE DESCRIPTION PAGE 1 Reporting Entity and Summary of Significant Accounting Policies..…………… 21 – 29 2 Cash and Investments……………………………………………………………………………..…………….. 29 – 35 3 Fair Value Measurements…………………………………………..………........................................ 35 – 36 4 Capital Assets…………………………………………………..………………………………………………………. 37 5 Long-Term Debt………………………………………………….…………………………………………………… 38 – 45 6 Net Position……………………………………………………………………………………………………………….. 46 7 Defined Benefit Pension Plan……………………………………………………………………………….. 46 – 53 8 Other Post Employment Benefits………………………..…………............................................ 53 – 58 9 Other Non-Current Liabilities…….………………………..…………............................................ 59 10 Commitments and Contingencies……………………………………………………………………... 59 – 61 11 Risk Management……………………………………………………………………………………………………. 61 – 62 12 Leases Receivable…..………………………………………………..……………………………………………. 62 13 Segment Information………………………………………………..……………………………………………. 62 – 65 14 Subsequent Event……………………………………………………………………………………...…………… 65 20 Notes To Financial Statements Year Ended June 30, 2024 1) REPORTING ENTITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A) Reporting Entity The reporting entity Otay Water District (the “District”) includes the accounts of the District and the Otay Water District Financing Authority (the “Financing Authority”). The District is a public entity established in 1956 pursuant to the Municipal Water District Law of 1911 (Section 711 et. Seq. of the California Water Code) for the purpose of providing water and wastewater services to the properties in the District. The District is governed by a Board of Directors consisting of five directors elected by geographical divisions based on District population for a four-year alternating term. The District formed the Financing Authority on March 3, 2010 under the Joint Exercise of Powers Act, constituting Articles 1 through 4 (commencing with Section 6500) of Chapter 5, Division 7, Title 1 of the California Government Code. The Financing Authority was formed to assist the District in the financing of public capital improvements. The financial statements present the District and its component unit. The District is the primary government unit. Component units are those entities which are financially accountable to the primary government, either because the District appoints a voting majority of the component unit’s board, or because the component units will provide a financial benefit or impose a financial burden on the District. The District has accounted for the Financing Authority as a “blended” component unit. Despite being legally separate, the Financing Authority is so intertwined with the District that it is in substance, part of the District’s operations. Accordingly, the balances and transactions of this component unit are reported within the funds of the District. Separate financial statements are not issued for the Financing Authority. B) Measurement Focus, Basis of Accounting and Financial Statement Presentation Measurement focus is a term used to describe “which” transactions are recorded within the various financial statements. Basis of accounting refers to “when” transactions are recorded regardless of the measurement focus applied. The accompanying financial statements are reported using the economic resources measurement focus, and the accrual basis of accounting. Under the economic measurement focus all assets and liabilities (whether current or noncurrent) associated with these activities are included on the Statement of Net Position. 21 Notes To Financial Statements Year Ended June 30, 2024 1) REPORTING ENTITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued B) Measurement Focus, Basis of Accounting and Financial Statement Presentation - Continued The Statement of Revenues, Expenses and Changes in Net Position present increases (revenues) and decreases (expenses) in total net position. Under the accrual basis of accounting, revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. The District reports its activities as an enterprise fund, which is used to account for operations that are financed and operated in a manner similar to a private business enterprise, where the intent of the District is that the costs (including depreciation) of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges. The basic financial statements of the Otay Water District have been prepared in conformity with accounting principles generally accepted in the United States of America. The Governmental Accounting Standards Board (GASB) is the accepted standard setting body for governmental accounting financial reporting purposes. Net position of the District is classified into three components: (1) net investment in capital assets, (2) restricted net position, and (3) unrestricted net position. These classifications are defined as follows: Net Investment in Capital Assets This component of net position consists of capital assets, net of accumulated depreciation and reduced by the outstanding balances of notes or borrowing that are attributable to the acquisition of the assets, construction, or improvement of those assets. If there are significant unspent related debt proceeds at year-end, the portion of the debt attributable to the unspent proceeds are not included in the calculation of the net investment in capital assets. Restricted Net Position This component of net position consists of net position with constrained use through external constraints imposed by creditors (such as through debt covenants), grantors, contributions, or laws or regulations of other governments or constraints imposed by law through constitutional provisions or enabling legislation. 22 Notes To Financial Statements Year Ended June 30, 2024 1) REPORTING ENTITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued B) Measurement Focus, Basis of Accounting and Financial Statement Presentation - Continued Unrestricted Net Position This component of net position consists of net position that do not meet the definition of “net investment in capital assets” or “restricted net position”. The District distinguishes operating revenues and expenses from those revenues and expenses that are non-operating. Operating revenues are those revenues that are generated by water sales and wastewater services while operating expenses pertain directly to the furnishing of those services. Non- operating revenues and expenses are those revenues and expenses generated that are not associated with the normal business of supplying water and wastewater treatment services. The District recognizes revenues from water sales, wastewater revenues, and meter fees as they are earned. Taxes and assessments are recognized as revenues based upon amounts reported to the District by the County of San Diego, net of allowance for delinquencies of $32,519 at June 30, 2024. Additionally, capacity fee contributions received which are related to specific operating expenses are offset against those expenses and included in Cost of Water Sales in the Statement of Revenues and Expenses and Changes in Net Position. Sometimes the District will fund outlays for a particular purpose from both restricted (e.g., restricted bond or grant proceeds) and unrestricted resources. In order to calculate the amounts to report as restricted - net position and unrestricted - net position, a flow assumption must be made about the order in which the resources are considered to be applied. It is the District’s practice to consider restricted - net position to have been depleted before unrestricted - net position is applied, however it is at the Board’s discretion. 23 Notes To Financial Statements Year Ended June 30, 2024 1) REPORTING ENTITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued C) Pending Accounting Pronouncements GASB has issued the following statements which may impact the District’s financial reporting requirements in the future: i. GASB Statement 101 - “Compensated Absences”, effective for reporting periods beginning after December 15, 2023. ii. GASB Statement 102 - “Certain Risk Disclosures”, effective for reporting periods beginning after June 15, 2024. iii. GASB Statement 103 - “Financial Reporting Model Improvements”, effective for reporting periods beginning after June 15, 2025. D) Deferred Outflows/ Deferred Inflows In addition to assets, the Statement of Net Position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net assets that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. The District has two items that qualify for reporting in this category, deferred actuarial pension costs and deferred actuarial OPEB costs are items that are deferred and recognized as an outflow of resources in the period the amounts become available. In addition to liabilities, the Statement of Net Position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net assets that applies to a future period(s) and will not be recognized as an inflow of resources (revenue) until that time. The District has two items that qualify for reporting in this category. Accordingly, the items (deferred actuarial OPEB costs and deferred lease revenue) are deferred and recognized as an inflow of resources in the period that the amounts become available. 24 Notes To Financial Statements Year Ended June 30, 2024 1) REPORTING ENTITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued E) Statement of Cash Flows For purposes of the Statement of Cash Flows, the District considers all highly liquid investments (including restricted assets) with a maturity period, at purchase, of three months or less to be cash equivalents. F) Investments Investments are stated at their fair value, which represents the quoted or stated market value. Investments that are not traded on a market, such as investments in external pools, are valued based on the stated fair value as presented by the external pool. All investments are stated at their fair value. The District has not elected to report certain investments at amortized costs. G) Inventory and Prepaid Items Inventory consists primarily of materials used in the construction and maintenance of the water and wastewater system and is valued at weighted average cost. Both inventory and prepaid items use the consumption method whereby they are reported as an asset and expensed as they are consumed. H) Capital Assets Capital assets are recorded at cost, where historical records are available, and at an estimated historical cost where no historical records exist. Right-to-use assets for leases and subscription-based information technology arrangements are recorded at net present value at the time of inception. Infrastructure assets in excess of $20,000 and other capital assets in excess of $10,000 are capitalized if they have an expected useful life of two years or more. The District will also capitalize individual purchases under the capitalization threshold if they are part of a new capital program. The cost of purchased and self-constructed additions to utility plant and major replacements of property are capitalized. Costs include materials, direct labor, transportation, and such indirect items as engineering, supervision, employee fringe benefits and overhead. Repairs, maintenance, and minor replacements of property are charged to expense. Donated assets are capitalized at their acquisition value on the date contributed. 25 Notes To Financial Statements Year Ended June 30, 2024 1) REPORTING ENTITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued H) Capital Assets – Continued Depreciation is calculated using the straight-line method over the following estimated useful lives: Water System 15-70 Years Field Equipment 2-50 Years Buildings 30-50 Years Communication Equipment 2-10 Years Transportation Equipment 2-7 Years Office Equipment 2-10 Years Recycled Water System 15-70 Years Wastewater System 25-50 Years Right to Use Asset/SBITA The estimated life of the leased/subscribed asset or the contract term whichever is shorter I) Other Non-Current Liabilities For compensated absences, the District’s policy is to record vested and accumulated vacation and sick leave as an expense and liability as benefits accrue to employees. The current portion is reflected in accrued payroll liabilities and remainder in other non-current liabilities on the Statement of Net Position. J) Classification of Liabilities Certain current liabilities have been classified as current liabilities payable from restricted assets as they will be funded from restricted assets. K) Allowance for Doubtful Accounts The District charges doubtful accounts arising from water sales receivable to bad debt expense when it is probable that the accounts will be uncollectible. Uncollectible accounts are determined by the allowance method based upon prior experience and management’s assessment of the collectability of existing specific accounts. The allowance for doubtful accounts was $268,076 for 2024. 26 Notes To Financial Statements Year Ended June 30, 2024 1) REPORTING ENTITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued L) Property Taxes Tax levies are limited to 1% of full market value (at time of purchase) which results in a tax rate of $1.00 per $100 assessed valuation, under the provisions of Proposition 13. Tax rates for voter- approved indebtedness are excluded from this limitation. The County of San Diego (the “County”) bills and collects property taxes on behalf of the District. The County’s tax calendar year is July 1 to June 30. Property taxes attach as a lien on property on January 1. Taxes are levied on July 1 and are payable in two equal installments on November 1 and February 1, and become delinquent after December 10 and April 10, respectively. M) Pensions For purposes of measuring the net pension liability, deferred outflows of resources, and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the Plan and additions to/deductions from the Plans’ fiduciary net position have been determined on the same basis. For this purpose, benefit payments (including refunds of employee contributions) are recognized when currently due and payable in accordance with the benefit terms. Investments are reported at fair value. Valuation Date June 30, 2022 Measurement Date June 30, 2023 Measurement Period July 1, 2022 to June 30, 2023 N) Other Post-Employment Benefits (OPEB) For purposes of measuring the net OPEB liability(asset), deferred outflows/inflows of resources related to OPEB, and OPEB expense, information about the fiduciary net position of the District’s plan (OPEB Plan) and additions to/deductions from the OPEB Plan’s fiduciary net position have been determined on the same basis. For this purpose, benefit payments are recognized when currently due and payable in accordance with the benefit terms. Investments are reported at fair value. 27 Notes To Financial Statements Year Ended June 30, 2024 1) REPORTING ENTITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued N) Other Post-Employment Benefits (OPEB) - Continued Generally accepted accounting principles require that the reported results must pertain to liability and asset information within certain defined timeframes. For this report, the following timeframes are used: Valuation Date June 30, 2023 Measurement Date June 30, 2023 Measurement Period July 1, 2022 to June 30, 2023 O) Leases The District is a lessor and lessee for leases as detailed in Footnotes 5 and 11. The District recognizes a lease receivable, a deferred inflow of resources, right to use capital assets, and a lease payable in the financial statements. At the commencement of the lease, the District initially measures the lease receivable at the present value of payments expected to be received and paid during the lease term. Subsequently, the lease receivable is reduced by the principal portion of lease payments received and the lease payable is reduced by the principal portion of lease payments made. The deferred inflow of resources is initially measured as the initial amount of the lease receivable, adjusted for lease payments received at or before the lease commencement date. Subsequently, the deferred inflows of resources are recognized as revenue over the life of the lease term. Key estimates and judgments include how the district determines the discount rate it uses to discount the expected lease receipts and payments to present value, lease term and lease receipts. The District used the weighted average cost of capital rate as the discount rate for leases. The lease term includes the non-cancellable period of the lease. The District monitors changes in circumstances that would require a remeasurement of its leases and will remeasure the lease receivable and deferred inflows of resources if certain changes occur that are expected to significantly affect the amount of the lease receivable. P) Subscription Based Information Technology Arrangements (SBITAs) The District is a participant in subscription-based IT arrangements as detailed in Footnote 5. The District recognizes a subscription-based IT payable and the right to use IT assets in the financial statements. 28 Notes To Financial Statements Year Ended June 30, 2024 1) REPORTING ENTITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued P) Subscription Based Information Technology Arrangements (SBITAs) - Continued At the commencement of the arrangement, the District initially measures the payable at the present value of payments expected to be paid during the arrangement term. Subsequently, the payable is reduced by the principal portion of payments made. The right to use assets are initially measured at the initial amount of the subscription-based IT payable. Subsequently, the right to use assets are amortized over the life of the arrangement term. Q) Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, deferred outflows of resources, liabilities, and deferred inflows of resources, and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. R) Prior Year Comparative Information Selected information regarding the prior year has been included in the accompanying financial statements. This information has been included for comparison purposes only and does not represent a complete presentation in accordance with generally accepted accounting principles. Accordingly, such information should be read in conjunction with the government’s prior year financial statements, from which this selected financial data was derived. In addition, certain minor reclassifications of the prior year data have been made to enhance their comparability to the current year. 2) CASH AND INVESTMENTS The primary goals of the District’s Investment Policy are to assure compliance with all Federal, State, and Local laws governing the investment of funds under the control of the organization, protect the principal of investments entrusted, remain sufficiently liquid to enable the District to meet all operating requirements and generate income at a market rate of return under the parameters of such policies. 29 Notes To Financial Statements Year Ended June 30, 2024 2) CASH AND INVESTMENTS - Continued Cash and Investments are classified in the accompanying financial statements as follows: Cash and Investments consist of the following: Investments Authorized by the California Government Code and the District’s Investment Policy The table on the following page identifies the investment types that are authorized for the District by the California Government Code (or the District’s Investment Policy, where more restrictive). The table also identifies certain provisions of the California Government Code (or the District’s Investment Policy, where more restrictive) that address interest rate risk, credit risk, and concentration of credit risk. This table does not address investments of debt proceeds held by bond trustees that are governed by the provisions of debt agreements of the District, rather than the general provisions of the California Government Code or the District’s Investment Policy. Statement of Net Position: Cash and Cash Equivalents 77,264,706$ Restricted Cash and Cash Equivalents 3,132,285 Investments 35,691,622 Restricted Investments 3,587,676 Total Cash and Investments 119,676,289$ Cash on Hand 3,100$ Deposits with Financial Institutions 1,095,094 Investments 118,578,095 Total Cash and Investments 119,676,289$ 30 Notes To Financial Statements Year Ended June 30, 2024 2) CASH AND INVESTMENTS - Continued Maximum Maximum Authorized Maximum Percentage Investment Investment Type Maturity Of Portfolio(1) In One Issuer U.S. Treasury Obligations 5 years 100% 100% U.S. Government Sponsored Entities 5 years 100% 100% Certificates of Deposit 5 years 15% 100% Corporate Medium-Term Notes 5 years 10% 2% Commercial Paper 270 days 10% 2% Money Market Mutual Funds N/A 10% 100% County Pooled Investment Funds N/A 100% N/A Local Agency Investment Fund (LAIF) N/A $75 Million N/A (1) Excluding amounts held by bond trustee that are not subject to California Government Code restrictions. Investments Authorized by Debt Agreements Investments of debt proceeds held by the bond trustee are governed by provisions of the debt agreements, rather than the general provisions of the California Government Code or the District’s Investment Policy. Disclosures Relating to Interest Rate Risk Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. One of the ways that the District manages its exposure to interest rate risk is by purchasing investments with shorter durations than the maximum allowable under the District’s Investment Policy and by timing cash flows from maturities, so that a portion of the portfolio is maturing or coming close to maturity evenly over time, as necessary, to provide the cash flow and liquidity needed for operations. Information about the sensitivity of the fair values of the District’s investments to market interest rate fluctuations are provided by the following tables that show the distribution of the District’s investments by maturity as of June 30, 2024. 31 Notes To Financial Statements Year Ended June 30, 2024 2) CASH AND INVESTMENTS – Continued Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. Presented below is the minimum rating required by (where applicable) the California Government Code or the District’s Investment Policy, or debt agreements, and the Moody’s ratings as of June 30, 2024. Concentration of Credit Risk The investment policy of the District contains various limitations on the amounts that can be invested in any one type or group of investments and in any issuer, beyond that stipulated by the California Government Code, Sections 53600 through 53692. All the investments for fiscal year 2024 are within the limitations of the District’s investment policy. 12 Months 13 to 36 More than Investment Type Total Or Less Months 36 Months U.S. Government Sponsored Entities $ 46,304,216 32,862,350$ 13,441,866$ -$ U.S. Treasury Obligations 5,959,920 2,970,570 2,989,350 - Local Agency Investment Fund (LAIF) 65,123,748 65,123,748 - - San Diego County Pool 905,000 905,000 - - Money Market Funds 285,211 285,211 - - Total $ 118,578,095 $ 102,146,879 $ 16,431,216 -$ Remaining Maturity (in Months) Legal Minimum Not Investment Type Total Rating AAA Rated U.S. Government Sponsored Entities $ 46,304,216 A 46,304,216$ -$ U.S. Treasury Obligations 5,959,920 N/A - 5,959,920 Local Agency Investment Fund (LAIF) 65,123,748 N/A - 65,123,748 San Diego County Pool 905,000 N/A 905,000 - Money Market Funds 285,211 AAA 285,211 - Total $ 118,578,095 47,494,427$ 71,083,668$ Rating as of Year End 32 Notes To Financial Statements Year Ended June 30, 2024 2) CASH AND INVESTMENTS – Continued The investments listed below disclose the concentration of risk within the District’s investment portfolio. Investments in any one issuer (other than U.S. Treasury securities, mutual funds, and external investment pools) that represent 5% or more of total District investments as of June 30, 2024: Custodial Credit Risk Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, the District will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party. The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty (e.g., broker-dealer) to a transaction, the District will not be able to recover the value of its investment or collateral securities that are in the possession of another party. The California Government Code and the District’s Investment Policy do not contain legal or policy requirements that would limit the exposure to custodial credit risk for deposits or investments, other than the following provision for deposits: The California Government Code requires that a financial institution secure deposits made by state or local government units by pledging securities in an undivided collateral pool held by a depository regulated under state law (unless so waived by the governmental unit). The market value of the pledged securities in the collateral pool must equal at least 110% of the total amount deposited by the District. California law also allows financial institutions to secure deposits by pledging first trust deed mortgage notes having a value of 150% of the secured public deposits. As of June 30, 2024, $1,293,995 of the District’s deposits with financial institutions in excess of federal depository insurance limits, were held in collateralized accounts. Local Agency Investment Fund (LAIF) The District is a voluntary participant in the Local Agency Investment Fund (LAIF) that is regulated by California Government Code Section 16429 under the oversight of the Treasurer of the State of California. Reported Issuer Investment Type Amount Federal Home Loan Bank U.S. Government Sponsored Entities 8,977,800$ Federal National Mortgage Assoc. U.S. Government Sponsored Entities 11,846,300 Federal Farm Credit Bank U.S. Government Sponsored Entities 15,902,160 Federal Home Loan Mortgage U.S. Government Sponsored Entities 9,577,956 33 Notes To Financial Statements Year Ended June 30, 2024 2) CASH AND INVESTMENTS – Continued The fair value of the District’s investment in this pool is reported in the accompanying financial statements at amounts based upon District’s pro-rata share of the fair value provided by LAIF for the entire LAIF portfolio (in relation to the amortized cost of that portfolio). The balance available for withdrawal is based on the accounting records maintained by LAIF, which are recorded on an amortized cost basis. The LAIF is a special fund of the California State Treasury through which local governments may pool investments. The District may invest up to $75,000,000 in the fund. Investments in LAIF are highly liquid, as deposits can be converted to cash within twenty-four hours without loss of interest. Investments with LAIF are secured by the full faith and credit of the State of California. The annualized yield of LAIF for the quarter ended June 30, 2024 was 4.36%. The estimated amortized cost and fair value of the LAIF pool at June 30, 2024 was $65,123,748. San Diego County Pooled Fund The San Diego County Pooled Investment Fund (SDCPIF) is a pooled investment fund program governed by the County of San Diego Board of Supervisors and administered by the County of San Diego Treasurer and Tax Collector. Investments in SDCPIF are highly liquid as deposits and withdrawals can be made at any time without penalty, determined on an amortized cash basis, the same as the fair value of the District’s position in the pool. The County of San Diego’s bank deposits are either federally insured or collateralized in accordance with the California Government Code. Pool detail is included in the County of San Diego Comprehensive Annual Financial Report (“Annual Report”). Copies of the Annual Report may be obtained from the County of San Diego Auditor-Controller’s Office – 1600 Pacific Coast Highway, San Diego California 92101. Cash and investments are restricted for the cost of the following District projects and debt service: Cash and Cash Equivalents: New Water Supply 3,083,883$ Cash and Cash Equivalents: Debt Service: Water Revenue Bond Series 2010A 15,016$ Water Revenue Bond Series 2010B 33,386 48,402$ 34 Notes To Financial Statements Year Ended June 30, 2024 2) CASH AND INVESTMENTS – Continued Restricted Investments 3) FAIR VALUE MEASUREMENTS Governmental Accounting Standards Board (GASB) Statement No. 72, Fair Value Measurements and Application, provides the framework for measuring fair value. The framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value with Level 1 given the highest priority and Level 3 the lowest priority. The three levels of the fair value hierarchy are as follows: Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the organization has the ability to access at the measurement date. Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include the following: a. Quoted prices for similar assets or liabilities in active markets. b. Quoted prices for identical or similar assets or liabilities in markets that are not active. c. Inputs other than quoted prices that are observable for the asset or liability (for example, interest rates and yield curves observable at commonly quoted intervals, volatilities, prepayment speeds, loss severities, credit risks, and default rates). d. Inputs that are derived principally from or corroborated by observable market data by correlation or other means (market-corroborated inputs). Level 3 inputs are unobservable inputs for the asset or liability. Debt Service: Water Revenue Bond Series 2010A 987,651$ Water Revenue Bond Series 2010B 2,600,025 3,587,676$ 35 Notes To Financial Statements Year Ended June 30, 2024 3) FAIR VALUE MEASUREMENTS - Continued Fair value of assets measured on a recurring basis at June 30, 2024 are as follows: Investments classified in Level 2 of the fair value hierarchy are valued using a matrix pricing technique. Matrix pricing is used to value securities based on the securities’ relationship to benchmark quoted prices. Investments not measured at fair value do not fall under the fair value hierarchy as there is no active market for the investments. Quoted Prices in Significant Other Active Markets Observable Inputs Not Measured Total (Level 1)(Level 2)at Fair Value U.S. Government Sponsored Entities 46,304,216$ -$ 46,304,216$ -$ U.S. Treasury Obligations 5,959,920 5,959,920 - - Local Agency Investment Fund (LAIF) 65,123,748 - - 65,123,748 San Diego County Pool 905,000 - - 905,000 Money Market Funds 285,211 - - 285,211 Total $118,578,095 $ 5,959,920 $ 46,304,216 $ 66,313,959 36 Notes To Financial Statements Year Ended June 30, 2024 4) CAPITAL ASSETS The following is a summary of changes in Capital Assets for the year ended June 30, 2024: Depreciation expense for the year ended June 30, 2024 was $18,276,492. Beginning Ending Balance Additions Deletions Balance Capital Assets, Not Depreciated: Land $ 14,479,573 $ - $ - $ 14,479,573 Construction in Progress 11,741,448 6,690,119 (7,718,752) 10,712,815 Total Capital Assets, Not Depreciated 26,221,021 6,690,119 (7,718,752) 25,192,388 Capital Assets, Being Depreciated: Infrastructure 721,156,409 6,465,414 (1,723,745) 725,898,078 Field Equipment 8,337,001 266,284 (1,962,160) 6,641,125 Buildings 19,729,303 91,050 (560,947) 19,259,406 Transportation Equipment 3,916,153 1,057,730 (2,177) 4,971,706 Communication Equipment 2,602,855 - (97,381) 2,505,474 Office Equipment 8,064,375 85,326 (172,656) 7,977,045 Right to Use Assets - Leases 738,501 - - 738,501 Right to Use Assets - SBITA 123,039 5,499,767 - 5,622,806 Total Capital Assets, Being Depreciated 764,667,636 13,465,571 (4,519,066) 773,614,141 Less Accumulated Depreciation: Infrastructure 316,855,095 16,555,831 (1,199,610) 332,211,316 Field Equipment 6,809,532 278,799 (1,935,467) 5,152,864 Buildings 11,015,579 483,851 (390,106) 11,109,324 Transportation Equipment 2,839,122 347,489 (2,176) 3,184,435 Communication Equipment 2,249,323 107,503 (97,382) 2,259,444 Office Equipment 7,560,048 174,167 (169,264) 7,564,951 Right to Use Assets - Leases 70,333 35,167 - 105,500 Right to Use Assets - SBITA 37,850 293,685 - 331,535 Total Accumulated Depreciation 347,436,882 18,276,492 (3,794,005) 361,919,369 Total Capital Assets, Being Depreciated, Net 417,230,754 (4,810,921) (725,061) 411,694,772 Total Capital Assets, Net $ 443,451,775 $ 1,879,198 $ (8,443,813) $ 436,887,160 37 Notes To Financial Statements Year Ended June 30, 2024 5) LONG-TERM DEBT Long-term liabilities for the year ended June 30, 2024 are as follows: Water Revenue Bonds In April 2010, Water Revenue Bonds with a face value of $50,195,000 were sold by the Otay Water District Financing Authority to provide funds for the construction of water storage and transmission facilities. The bond issue consisted of two series; Water Revenue Bonds, Series 2010A (Non-AMT Tax Exempt) with a face value of $13,840,000 plus a $1,078,824 original issue premium, and Water Revenue Bonds, Series 2010B (Taxable Build America Bonds) with a face value of $36,355,000. The Series 2010A bonds are due in annual installments of $785,000 to $1,295,000 from September 1, 2012 through September 1, 2024; bearing interest at 2% to 5.25%. The Series 2010B bonds are due in annual installments of $1,365,000 to $3,505,000 from September 1, 2025 through September 1, 2040; bearing interest at 6.377% to 6.577%. Beginning Ending Due Within Balance Additions Deletions Balance One Year Revenue Bonds: 2010 Water Revenue Bonds Series A 2,530,000$ -$ (1,235,000)$ 1,295,000$ 1,295,000$ 2010 Water Revenue Bonds Series B 36,355,000 - - 36,355,000 - 2013 Water Revenue Refunding Bonds 835,000 - (835,000) - - 2016 Water Revenue Refunding Bonds 25,370,000 - (1,350,000) 24,020,000 1,420,000 2018 Water Revenue Bonds 27,055,000 - (1,650,000) 25,405,000 1,730,000 2019 Wastewater Revenue Bonds 2,985,000 - (75,000) 2,910,000 75,000 2010 Series A Unamortized Premium 93,002 - (74,402) 18,600 18,600 2013 Bonds Unamortized Premium 16,015 - (16,015) - - 2016 Bonds Unamortized Premium 2,351,190 - (178,571) 2,172,619 178,571 2018 Bonds Unamortized Premium 2,201,154 - (109,148) 2,092,006 109,148 2019 Bonds Unamortized Discount (12,066) - 461 (11,605) (461) Net Revenue Bonds 99,779,295 - (5,522,675) 94,256,620 4,825,858 Lease Payable 707,727 - (17,188) 690,539 18,781 Subscription-Based IT Payable 85,348 5,499,767 (290,684) 5,294,431 380,038 Total Long-Term Liabilities 100,572,370$ 5,499,767$ (5,830,547)$ 100,241,590$ 5,224,677$ 38 Notes To Financial Statements Year Ended June 30, 2024 5) LONG-TERM DEBT – Continued Water Revenue Bonds – Continued Interest on both Series is payable on September 1, 2010 and semiannually thereafter on March 1st and September 1st of each year until maturity or earlier redemption. The installment payments are to be made from taxes and net revenues of the Water System as described in the installment purchase agreement, on parity with the payments required to be made by the District for the 2013, 2016 Water Revenue Refunding Bonds and 2018 Water Revenue Bonds described below. The original issue premium is being amortized over the 14-year life of the Series 2010A bonds. Amortization for the year ending June 30, 2024 was $74,402. The amortization is included in interest expense. The unamortized premium at June 30, 2024 is $18,600. The 2010 Water Revenue Bonds contains various covenants and restrictions, principally that the District fix, prescribe, revise and collect rates, fees and charges for the Water System which will at least be sufficient to yield, during each fiscal year, taxes and net revenues equal to one hundred twenty-five percent (125%) of the debt service for such fiscal year. The District was in compliance with these rate covenants for the fiscal year ended June 30, 2024. In June 2013, the 2013 Water Revenue Refunding Bonds were issued to defease the 2004 Refunding Certificates of Participation. The bonds were issued with a face value of $7,735,000 plus a $984,975 original issue premium. The bonds are due in annual installments of $660,000 to $835,000 from September 1, 2013 through September 1, 2023; bearing interest at 1% to 4%. The installment payments are to be made from taxes and net revenues of the Water System, on parity with the payments required to be made by the District for the 2016 Water Revenue Refunding Bonds, the 2010A, 2010B and 2018 Water Revenue Bonds. The original issue premium is being amortized over the 11-year life of the Series 2013 bonds. Amortization for the year ending June 30, 2024 was $16,015. The amortization is included in interest expense. The unamortized premium at June 30, 2024 is $0. 39 Notes To Financial Statements Year Ended June 30, 2024 5) LONG-TERM DEBT – Continued Water Revenue Bonds – Continued In May 2016, Water Revenue Refunding Bonds were issued to defease the 2007 Revenue Certificates of Participation. The bonds are due in annual installments of $1,200,000 to $2,235,000 from September 1, 2016 through September 1, 2036; bearing interest of 2% to 5%. The bonds were issued with a face value of $33,385,000 plus $3,630,950 original issue premium. The savings between the cash flow required to service, the old debt and the cash flow required to service the new debt is $5,664,140 and represent an economic gain on refunding of $4,538,175. The original issue premium is being amortized over the 20-year life of the Series 2016 bonds. Amortization for the year ending June 30, 2024 was $178,571. The amortization is included in interest expense. The unamortized premium at June 30, 2024 is $2,172,619. In November 2018, Water Revenue Bonds were issued by the Otay Water District Financing Authority to provide funds for construction of water storage, treatment and transmission facilities and to refinance the 1996 Certificates of Participation. The bonds are due in annual installments of $775,000 to $1,915,000 from September 1, 2019 through September 1, 2043; bearing interest of 3% to 5%. The bonds were issued with a face value of $32,435,000 plus $2,710,512 original issue premium. The original issue premium is being amortized over the 25-year life of the Series 2018 bonds. Amortization for the year ending June 30, 2024 was $109,148. The amortization expense is included in interest expense. The unamortized premium at June 30, 2024 is $2,092,006. 40 Notes To Financial Statements Year Ended June 30, 2024 5) LONG-TERM DEBT – Continued Water Revenue Bonds – Continued The total amount outstanding at June 30, 2024 and aggregate maturities of the revenue bonds for the fiscal years subsequent to June 30, 2024, are as follows: For the Year Ended June 30,Principal Interest Principal Interest 2025 1,295,000$ 33,994$ -$ 2,371,868$ 2026 - - 1,365,000 2,328,345 2027 - - 1,450,000 2,238,589 2028 - - 1,545,000 2,143,093 2029 - - 1,640,000 2,041,540 2030-2034 - - 9,925,000 8,425,226 2035-2039 - - 13,635,000 4,590,582 2040-2041 - - 6,795,000 453,977 1,295,000$ 33,994$ 36,355,000$ 24,593,220$ 2010 Water Revenue Bond Series A 2010 Water Revenue Bond Series B For the Year Ended June 30,Principal Interest Principal Interest 2025 1,420,000$ 806,581$ 1,730,000$ 1,061,288$ 2026 1,495,000 733,706 1,820,000 972,538 2027 1,570,000 657,081 1,915,000 879,163 2028 1,645,000 584,931 1,030,000 805,538 2029 1,715,000 517,731 1,080,000 752,788 2030-2034 9,655,000 1,611,809 6,220,000 2,935,238 2035-2039 6,520,000 286,219 6,550,000 1,596,500 2040-2044 - - 5,060,000 450,331 24,020,000$ 5,198,058$ 25,405,000$ 9,453,384$ Refunding Bonds Revenue Bonds 2016 Water Revenue 2018 Water 41 Notes To Financial Statements Year Ended June 30, 2024 5) LONG-TERM DEBT – Continued Wastewater Revenue Bonds In December 2019, Wastewater Revenue Bonds were issued by the Otay Water District Financing Authority to provide funds to pay for certain capital improvements to the District’s wastewater system. The bonds are due in annual installments of $65,000 to $160,000 from September 1, 2021 through September 1, 2049; bearing interest of 2% to 3.125%. The bonds were issued with a face value of $3,120,000 less a $13,680 original issue discount. The original issue discount is being amortized over the 30-year life of the Series 2019 bonds. Amortization for the year ending June 30, 2024 was $461. The amortization expense is included in interest expense. The unamortized discount at June 30, 2024 is $11,605. The 2019 Wastewater Revenue Bonds contains various covenants and restrictions, principally that the District fix, prescribe, revise and collect rates, fees and charges for the Wastewater System which will at least be sufficient to yield, during each fiscal year, net revenues equal to one hundred fifteen percent (115%) of the debt service for such fiscal year. The District was in compliance with these rate covenants for the fiscal year ended June 30, 2024. Future debt service requirements for the bonds are as follows: For the Year Ended June 30,Principal Interest 2025 75,000$ 85,416$ 2026 80,000 83,091 2027 80,000 80,691 2028 85,000 78,216 2029 85,000 75,666 2030-2034 470,000 339,364 2035-2039 535,000 270,623 2040-2044 615,000 186,188 2045-2049 725,000 83,203 2050 160,000 2,500 2,910,000$ 1,284,958$ 2019 Wastewater Revenue Bonds 42 Notes To Financial Statements Year Ended June 30, 2024 5) LONG-TERM DEBT – Continued Revenues Pledged The District has pledged a portion of future water sales revenues to repay its Water Revenue and Water Revenue Refunding Bonds. The total principal and interest remaining on the water revenue bonds and water revenue refunding bonds is $126,353,656 payable through fiscal year 2044. For June 30, 2024, principal and interest paid by the water sales revenues were $5,070,000 and $4,509,050 respectively. The District has pledged a portion of future wastewater sales revenues to repay its Wastewater Revenue Bonds. The total principal and interest remaining on the wastewater revenue bonds is $4,194,958 payable through fiscal year 2050. For June 30, 2024, principal and interest paid by the wastewater sales revenues were $75,000 and $87,291, respectively. Lease Payable Antenna Site Lease The District has one antenna site sublease payable with a lease term of forty-eight years. The District is required to make annual fixed payments ranging from $15,100 to $64,303, with a discount rate of 1.39%. The lease has three extension options of 5 years each. As of June 30, 2024, the value of the lease payable is $690,539. Future lease payable requirements are as follows: For the Year Ended June 30,Principal Interest 2025 18,781$ 9,479$ 2026 20,469 9,207 2027 22,253 8,911 2028 24,134 8,590 2029 26,114 8,242 2030-2034 164,375 34,945 2035-2039 233,151 21,273 2040-2042 181,262 3,994 690,539$ 104,641$ 43 Notes To Financial Statements Year Ended June 30, 2024 5) LONG-TERM DEBT – Continued Subscription-Based Information Technology Arrangements Fracta AI-Based Condition Assessment Software On July 20, 2022, the District entered into a 36-month subscription for the use of Fracta AI-Based Condition Assessment Software. An initial subscription liability was recorded in the amount of $35,494. As of June 30, 2024, the value of the subscription liability is $11,831. The District is required to make annual fixed payments of $11,995. The subscription has an interest rate of 1.39%. The value of the right to use asset as of June 30, 2024 is $35,494 with accumulated amortization of $23,663 is included in note 4 with right to use assets. Samsara Networks, Inc. On July 5, 2022, the District entered into a 36-month subscription for the use of GPS fleet management system software. An initial subscription liability was recorded in the amount of $70,934. As of June 30, 2024, the value of the subscription liability is $23,643. The District is required to make annual fixed payments of $23,972. The subscription has an interest rate of 1.39%. The value of the right to use asset as of June 30, 2024 of $70,934 with accumulated amortization of $47,290 is included in note 4 with right to use assets. Drone Deploy On April 30, 2023, the District entered into a 14-month subscription for the use of Drone Deploy software. An initial subscription liability was recorded in the amount of $16,611. As of June 30, 2024, the value of the subscription liability is $0. The value of the right to use asset as of June 30, 2024 of $16,611 with accumulated amortization of $16,611 is included in note 4 with right to use assets. Tyler Software SAAS On January 1, 2024, the District entered into a 15-year subscription for the use of SaaS Services to access Tyler Software. An initial subscription liability was recorded in the amount of $5,270,119. As of June 30, 2024, the value of the subscription liability is $5,101,340. The District is required to make annual variable payments ranging from $168,779 to $467,260. The subscription has an interest rate of 1.39%. The value of the right to use asset as of June 30, 2024 is $5,270,119 with accumulated amortization of $175,671 is included in note 4 with right to use assets. 44 Notes To Financial Statements Year Ended June 30, 2024 5) LONG-TERM DEBT – Continued Subscription-Based Information Technology Arrangements – Continued Planet Bids On December 1, 2023, the District entered into a 30-month subscription for the use of Planet Bids software. An initial subscription liability was recorded in the amount of $61,870. As of June 30, 2024, the value of the subscription liability is $46,538. The District is required to make annual variable payments ranging from $15,331 to $24,109. The subscription has an interest rate of 1.39%. The value of the right to use asset as of June 30, 2024 is $61,870 with accumulated amortization of $12,374 is included in note 4 with right to use assets. ESRI On June 26, 2023, the District entered into a 36-month subscription for the use of ESRI software. An initial subscription liability was recorded in the amount of $167,779. As of June 30, 2024, the value of the subscription liability is $111,079. The District is required to make annual fixed payments of $56,700. The subscription has an interest rate of 1.39%. The value of the right to use asset as of June 30, 2024 is $167,779 with accumulated amortization of $55,926 is included in note 4 with right to use assets. Future SBITA payable requirements are as follows: For the Year Ended June 30,Principal Interest 2025 380,038$ 73,593$ 2026 350,056 68,310 2027 274,113 63,444 2028 288,050 59,634 2029 302,485 55,630 2030-2034 1,747,504 210,816 2035-2039 1,952,185 77,409 5,294,431$ 608,836$ 45 Notes To Financial Statements Year Ended June 30, 2024 6) NET POSITION Designations of Net Position In addition to the restricted net position, a portion of unrestricted net position has been designated by the Board of Directors for the following purposes as of June 30, 2024: 7) DEFINED BENEFIT PENSION PLAN A) General Information about the Pension Plans Plan Descriptions All qualified permanent and probationary employees are eligible to participate in the District’s Plan, agent multiple-employer defined benefit pension plans administered by the California Public Employees’ Retirement System (CalPERS), which acts as a common investment and administrative agent for its participating member employers. Benefit provisions under the Plans are established by State statute and District resolution. CalPERS issues publicly available reports that include a full description of the pension plans regarding provisions, assumptions and membership information that can be found on the CalPERS website. CalPERS provides service retirement and disability benefits, annual cost of living adjustments and death benefits to plan members, who must be public employees and beneficiaries. Benefits are based on years of credited service, equal to one year of full-time employment. Members with five years of total service are eligible to retire at age 50 (52 if new PERS member) with statutorily reduced benefits. All members are eligible for non-duty disability benefits after 10 years of service. The death benefit is one of the following: the Basic Death Benefit, the 1959 Survivor Benefit, or the Optional Settlement 2W Death Benefit. The cost-of-living adjustments for the plan are applied as specified by the Public Employees’ Retirement Law. Designated Betterment 3,667,486$ Replacement Reserve 78,967,855 Designated Insurance 842,437 Designated New Supply Fund 6,381 Undesignated 5,019,513 Total $ 88,503,672 46 Notes To Financial Statements Year Ended June 30, 2024 7) DEFINED BENEFIT PENSION PLAN – Continued Benefits Provided The Plans’ provisions and benefits in effect at June 30, 2024 are summarized as follows: Prior to On or After Hire Date January 1, 2013 January 1, 2013 Benefit Formula 2.7% at 55 2% at 62 Benefit Vesting Schedule 5 years’ service 5 years’ service Benefit Payments Monthly for life Monthly for life Retirement Age 50 – 55+ 52 – 67+ Monthly Benefits, as a % of Eligible Compensation 2.0% to 2.7% 1.0% to 2.5% Required Employee Contribution Rates 2024 8.00% 7.50% Required Employer Contribution Rates 2024 22.07% 22.07% Employees Covered The following employees were covered by the benefit terms for the Plan: Inactive Employees or Beneficiaries Currently Receiving Benefits 228 Inactive Employees Entitled to But Not Yet Receiving Benefits 126 Active Employees 137 Total 491 Contributions Section 20814(c) of the California Public Employees’ Retirement Law requires that the employer contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. The total plan contributions for the Plan are determined through CalPERS’ annual actuarial valuation process. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. 47 Notes To Financial Statements Year Ended June 30, 2024 7) DEFINED BENEFIT PENSION PLAN – Continued The employer is required to contribute the difference between the actuarially determined rate and the contribution rate of employees. Employer contribution rates may change if plan contracts are amended. B) Net Pension Liability The District’s net pension liability for the Plan is measured as the total pension liability, less the pension plan’s fiduciary net position. The net pension liability of the Plan is measured as of June 30, 2023 rolled forward to June 30, 2024 using standard update procedures. A summary of actuarial assumptions and methods used to determine the net pension liability is shown below: Actuarial Assumptions The total pension liabilities in the June 30, 2023 actuarial valuations were determined using the following actuarial assumptions: Actuarial Cost Method Entry-Age Actuarial Cost Method Actuarial Assumptions: Discount Rate 6.90% Inflation 2.50% Salaries Increases Varies by entry age and service Mortality Rate Table Derived using CalPERS membership data for all funds(1) Post Retirement Benefit Increase See Footnote(2) (1)The probabilities of mortality are based on the 2021 CalPERS Experience Study and Review of Actuarial Assumptions. Mortality rates incorporate full generational mortality improvement using 80% of Scale MP-2020 published by the Society of Actuaries. (2)The lesser of contract COLA or 2.30% until Purchasing Power Protection Allowance floor on purchasing power applies, 2.30% thereafter. 48 Notes To Financial Statements Year Ended June 30, 2024 7) DEFINED BENEFIT PENSION PLAN – Continued Discount Rate The discount rate used to measure the total pension liability was 6.90%. The projection of cash flows used to determine the discount rate assumed that contributions from plan members will be made at the current member contribution rates and that contributions from employers will be made at statutorily required rates, actuarially determined. Based on those assumptions, the Plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on plan investments was applied to all periods of projected benefit payments to determine the total pension liability. Long-term Expected Rate of Return The long-term expected rate of return on pension plan investments was determined using a building- block method in which future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. In determining the long-term expected rate of return, CalPERS took into account both short-term and long-term market return expectations. Using historical returns of all the funds’ asset classes, expected compound (geometric) returns were calculated over the next 20 years using a building block approach. The expected rate of return was then adjusted to account for assumed administrative expenses of 10 Basis points. The expected real rates of return by asset class are as follows: (a) An expected inflation of 2.30% used for this period. (b) Figures are based on the 2021 Asset Liability Management study. Assumed Asset Class(a)Asset Allocation Real Return(b) Global Equity - Cap-weighted 30.00%4.54% Global Equity - Non-Cap-weighted 12.00 3.84 Private Equity 13.00 7.28 Treasury 5.00 0.27 Mortgage-backed Securities 5.00 0.50 Investment Grade Corporates 10.00 1.56 High Yield 5.00 2.27 Emerging Market Debt 5.00 2.48 Private Debt 5.00 3.57 Real Assets 15.00 3.21 Leverage (5.00) (0.59) 49 Notes To Financial Statements Year Ended June 30, 2024 7) DEFINED BENEFIT PENSION PLAN – Continued C) Changes in the Net Pension Liability (Asset) The changes in the Net Pension Liability (Asset) for the Plan for the year ending June 30, 2024: Total Pension Plan Fiduciary Net Pension Liability Net Position Liability (Asset) Beginning Balance 165,738,046$ 139,786,951$ 25,951,095$ Changes in the Year: Service Cost 2,989,611 - 2,989,611 Interest on the Total Pension Liability 11,457,149 - 11,457,149 Changes in Benefit Terms 137,177 - 137,177 Changes in Assumptions - - - Difference Between Expected and Actual Experience 3,092,819 - 3,092,819 Net Plan to Plan Resource Movement - - - Contributions - Employer 5,458,992 (5,458,992) Contributions - Employees 1,112,562 (1,112,562) Net Investment Income 8,605,145 (8,605,145) Benefit Payments, Including Refunds of Employee Contributions (8,834,436) (8,834,436) - Administrative Expense - (102,793) 102,793 Other Miscellaneous Income (Expense)--- Net Changes 8,842,320 6,239,470 2,602,850 Ending Balance 174,580,366$ 146,026,421$ 28,553,945$ Increase ( Decrease) 50 Notes To Financial Statements Year Ended June 30, 2024 7) DEFINED BENEFIT PENSION PLAN – Continued Sensitivity of the Net Pension Liability to Changes in the Discount Rate The following presents the net pension liability of the District for the Plan, calculated using the discount rate for the Plan, as well as what the District’s net pension liability would be if it were calculated using a discount rate that is 1-percentage point lower or 1-percentage point higher than the current rate: Pension Plan Fiduciary Net Position Detailed information about the pension plan’s fiduciary net position is available in the separately issued CalPERS financial reports. D) Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions For the year ended June 30, 2024, the District recognized pension expense of $8,369,481. At June 30, 2024, the District reported deferred outflows of resources and deferred inflows of resources related to pensions from the following services: 1% Decrease 5.90% Net Pension Liability 50,451,421$ Current Discount Rate 6.90% Net Pension Liability 28,553,945$ 1% Increase 7.90% Net Pension Liability/(Asset) 10,280,385$ Deferred Outflows of Resources Pension contributions subsequent to measurement date 3,095,172$ Changes of assumptions 1,424,127 Differences between actual and expected experience 2,038,160 Net difference between projected and actual earnings on pension plan investments 6,722,157 Total 13,279,616$ 51 Notes To Financial Statements Year Ended June 30, 2024 7) DEFINED BENEFIT PENSION PLAN – Continued D) Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions - Continued For fiscal year 2024, $3,095,172 reported as deferred outflows of resources related to contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the fiscal year ended June 30, 2025. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized as pension expense as follows : Under GASB 68, gains and losses related to changes in total pension liability and fiduciary net position are recognized in pension expense systematically over time. The first amortized amounts are recognized in pension expense for the year the gain or loss occurs. The remaining amounts are categorized as deferred outflows and deferred inflows of resources related to pensions and are to be recognized in future pension expense. The amortization period differs depending on the source of the gain or loss: Net difference between projected and actual earnings on pension plan investments 5-year straight-line amortization All other amounts Straight-line amortization over the expected average remaining service lifetime (EARSL) of all members that are provided with benefits (active, inactive, and retired) as of the beginning of the measurement period Fiscal Deferred Year Ended Outflow/(Inflows) June 30 of Resources 2025 3,802,044$ 2026 1,574,503 2027 4,617,258 2028 190,639 2029 - Thereafter - 52 Notes To Financial Statements Year Ended June 30, 2024 7) DEFINED BENEFIT PENSION PLAN – Continued E) Payable to the Pension Plan At June 30, 2024, the District reported a payable of $136,734 for the outstanding amount of contributions to the pension plan required for the year ended June 30, 2024. These payables are reflected in the accrued payroll liabilities on the Statement of Net Position. Subsequent Events There were no subsequent events that would materially affect the results presented in this disclosure. 8) OTHER POST EMPLOYMENT BENEFITS (OPEB) Plan Description The District’s defined benefit postemployment healthcare plan, (DPHP), provides medical benefits to eligible retired District employees and beneficiaries. DPHP is part of the Public Agency portion of the California Employers’ Retiree Benefit Trust Fund (CERBT), an agent multiple-employer plan administered by California Public Employees’ Retirement System (CalPERS), which acts as a common investment and administrative agent for participating public employers within the State of California. CalPERS issues a separate Annual Comprehensive Financial Report. Copies of the CalPERS’ annual financial report may be obtained from the CalPERS Executive Office, 400 P Street, Sacramento, California 95814. Prior to the plan agreements signed in 2011, the eligibility in the plan was broken into three tiers, employees hired before January 1, 1981, employees hired on or after January 1, 1981 but before July 1, 1993 and employees hired on or after July 1, 1993. Board members elected before January 1, 1995 are also eligible for the plan. Eligibility also includes age and years of service requirements which vary by tier. Benefits include up to 100% medical and/or dental premiums for life for the retiree for Tier I or II employees, and up to 100% spouse premium until death of retiree or age 65 whichever is greater and dependent premium up to age 19. Tier III employees received up to 50% medical (no dental coverage) up to age 65 and did not include dependent coverage. Subsequent to the agreements in 2011 and 2012 all employees are eligible for the plan after 20 years of consecutive service and unrepresented employees hired before January 1, 2013 are eligible after 15 years. Survivor benefits are covered beyond Medicare. 53 Notes To Financial Statements Year Ended June 30, 2024 8) OTHER POST EMPLOYMENT BENEFITS (OPEB) - Continued Employees Covered As of June 30, 2023 actuarial valuation, the following current and former employees were covered by the benefit terms under the Plan: Contributions The annual contribution is based on the actuarially determined contribution. For the fiscal year ended June 30, 2024, the District made cash contributions to the trust of $2,540,757 and had an estimated implied subsidy of $234,971, resulting in total payments of $2,775,728. Net OPEB Liability The District’s net OPEB liability was measured as of June 30, 2023 and the total OPEB liability used to calculate the net OPEB liability was determined by actuarial valuations dated June 30, 2023 based on the following actuarial methods and assumptions: Actuarial Assumptions Discount Rate 6.75% Inflation 2.50% Salary Increases 2.75% Investment Rate of Return 6.75% Mortality Rate(1)Derived using CalPERS Membership Data for all funds Pre-Retirement Turnover(2) Derived using CalPERS Membership Data for all funds Healthcare Trend Rate 4.50% PPO Notes: (1) The mortality assumptions are based on the 2021 CalPERS Mortality for Miscellaneous and Schools Employees table created by CalPERS. CalPERS periodically studies mortality for participating agencies and established mortality tables that are modified versions of commonly used tables. This table incorporates mortality projection as deemed appropriate based on CalPERS analysis. (2) The retirement assumptions are based on the 2021 CalPERS 2.0%@62 and 2.7%@55. Rates for Miscellaneous Employees tables created by CalPERS. CalPERS periodically studies the experience for participating agencies and establishes tables that are appropriate for each pool. Active Employees 137 Inactive Employees or Beneficiaries Currently Receiving Benefits 85 Inactive Employees Entitled to But Not Yet Received Benefits - Total 222 54 Notes To Financial Statements Year Ended June 30, 2024 8) OTHER POST EMPLOYMENT BENEFITS (OPEB) - Continued Net OPEB Liability (Continued) The long-term expected rate of return on OPEB plan investments was determined using a building block method in which best-estimate ranges of expected future real rates of return (expected returns, net of OPEB plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. Best estimates of arithmetic real rates of return for each major asset class included in the OPEB plan’s target asset are summarized in the following table for the June 30, 2023 actuarial valuation: Discount Rate The discount rate used to measure the total OPEB liability was 6.75% for the June 30, 2023 measurement period. The projection of cash flows used to determine the discount rate assumed that District contributions will be made at rates equal to the actuarially determined contribution rates. Based on those assumptions, the OPEB plan’s fiduciary net position was projected to be available to make all projected OPEB payments for current active and inactive employees and beneficiaries. Therefore, the long-term expected rate of return on OPEB plan investments was applied to all periods of projects benefit payments to determine the total OPEB liability. Long-Term Target Expected Real Asset Class Allocation Rate of Return All Equities 59.00%7.545% All Fixed Income 25.00%4.250% Real Estate Investment Trust 8.00%7.250% All Commodities 3.00%7.545% Treasury Inflation Protected Securities (TIPS) 5.00%3.000% 55 Notes To Financial Statements Year Ended June 30, 2024 8) OTHER POST EMPLOYMENT BENEFITS (OPEB) - Continued Changes in the OPEB Liability (Asset) The changes in the net OPEB liability (asset) for the Plan for the year ending June 30, 2024: Sensitivity of the Net OPEB Liability (Asset) to Changes in the Discount Rate The following presents the net OPEB liability (asset) of the District if it were calculated using a discount rate that is one percentage point lower or one percentage point higher than the current rate, for the measurement period ended June 30, 2023: Total OPEB Plan Fiduciary Net OPEB Liability Net Position Liability (Asset) Beginning Balance 34,537,166$ 29,485,905$ 5,051,261$ Changes in the year: Service Cost 1,018,363 - 1,018,363 Interest on TOL/Return on FNP 2,324,644 1,969,238 355,406 Difference Between Expected and Actual Experience 5,942,003 - 5,942,003 Changes of Assumptions 41,042 - 41,042 Contributions - Employer - 1,214,348 (1,214,348) Benefit Payments (1,214,348) (1,214,348) - Administrative Expenses - (8,619) 8,619 Net Changes 8,111,704 1,960,619 6,151,085 Ending Balance 42,648,870$ 31,446,524$ 11,202,346$ Increase ( Decrease) Current 1% Decrease Discount Rate 1% Increase 2024 Net OPEB Liability (Asset) (2023 Measurement Date)17,012,011$ 11,202,346$ 6,410,368$ 56 Notes To Financial Statements Year Ended June 30, 2024 8) OTHER POST EMPLOYMENT BENEFITS (OPEB) - Continued Sensitivity of the Net OPEB Liability (Asset) to Changes in the Healthcare Cost Trend Rates The following presents the net OPEB liability of the District if it were calculated using health care cost trend rates that are one percentage point lower or one percentage point higher than the current rate, for measurement period ended June 30, 2023: OPEB Plan Fiduciary Net Position CERBT issues a publicly available financial report that may be obtained from the California Public Employees Retirement System Executive Office, 400 P Street, Sacramento, California 95814. Recognition of Deferred Outflows and Deferred Inflows of Resources Gains and losses related to changes in total OPEB liability and fiduciary net position are recognized in OPEB expense systematically over time. Amounts are first recognized in OPEB expense for the year the gain or loss occurs. The remaining amounts are categorized as deferred outflows and deferred inflows of resources related to OPEB and are to be recognized in future OPEB expense. The recognition period differs depending on the source of the gain or loss: Net difference between projected and actual earnings on OPEB plan investments 5 years All other amounts Expected average remaining service lifetime (EARSL) Current Healthcare Cost 1% Decrease Trend Rates 1% Increase 2024 Net OPEB Liability (Asset) (2023 Measurement Date)5,739,269$ 11,202,346$ 17,964,377$ 57 Notes To Financial Statements Year Ended June 30, 2024 8) OTHER POST EMPLOYMENT BENEFITS (OPEB) - Continued OPEB Expense and Deferred Outflows/Inflows of Resources Related to OPEB For the fiscal year ended June 30, 2024, the District recognized OPEB expense of $1,196,786. As of the fiscal year ended June 30, 2024, the District reported deferred outflows and inflows of resources related to OPEB from the following sources: For fiscal year 2024, $2,775,728 reported as deferred outflows of resources related to contributions subsequent to the measurement date will be recognized as a reduction of the net OPEB liability in the fiscal year ended June 30, 2025. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized as pension expense as follows: Deferred Outflows Deferred Inflows of Resources of Resources OPEB contributions subsequent to measurement date 2,775,728$ -$ Differences between expected and actual experience 7,311,607 - Changes in assumptions 35,261 (870,274) Net difference between projected and actual earnings on OPEB plan investments 2,083,516 - Total 12,206,112$ (870,274)$ Fiscal Deferred Year Ended Outflows/(Inflows) June 30, of Resources 2025 1,596,718$ 2026 1,413,558 2027 2,599,732 2028 1,150,488 2029 872,667 Thereafter 926,947 58 Notes To Financial Statements Year Ended June 30, 2024 9) OTHER NON-CURRENT LIABILITIES Other non-current liabilities for the year ended June 30, 2024, are as follows: 10) COMMITMENTS AND CONTINGENCIES Construction Commitments The District has commitments related to capital projects under construction with an estimated cost to complete of $8,376,884 at June 30, 2024. Litigation Certain claims, suits and complaints arising in the ordinary course of operation have been filed or are pending against the District. In the opinion of the staff and counsel, most of those matters are adequately covered by insurance, or if not so covered, are without merit or are of such kind, or involved such amounts, as would not have significant effect on the financial position or results of operations of the District if disposed of unfavorably. There is one case, see below, that could have a significant effect on the District’s financial position. In November 2015, a District ratepayer filed a lawsuit against the District (Coziahr v. Otay Water District, Superior Court of the State of California, County of San Diego, contending that the District’s water rates violated Article XIIID of the California Constitution (“Proposition 218”). The court subsequently certified the action as a class action on behalf of all single-family residential ratepayers who have received water service at any time after July 14, 2014. On March 4, 2021, the court issued a decision in favor of the plaintiffs holding its tiered water rates adopted in 2013 and 2017 for the following 5-year periods were not proportionate to the cost of service attributable to each customer’s parcel, as required by Proposition 218. Beginning Ending Due Within Balance Additions Deletions Balance One Year Compensated absences 3,485,451$ 1,315,897$ (1,548,250)$ 3,253,098$ 325,309$ Customer credits 274,918 9,425 (20,187) 264,156 - Reimbursement agreements 356,644 - - 356,644 - Accrued litigation - 27,000,000 - 27,000,000 - Total 4,117,013$ 1,325,322$ (1,568,437)$ 30,873,898$ 325,309$ 59 Notes To Financial Statements Year Ended June 30, 2024 10) COMMITMENTS AND CONTINGENCIES – Continued On June 15, 2022, the court issued a Statement of Decision in the case. The Statement of Decision adopts a methodology for computing overcharges to ratepayers in the class based on the court’s earlier finding that the District’s tiered water rates adopted in 2013 and 2017 were not proportionate to the cost of service attributable to each customer’s parcel, as required by Proposition 218. Applying its methodology, the court states that the overcharges to ratepayers through June 2021 is estimated to be approximately $18,105,256, with an approximate additional $208,762 of overcharges plus interest accruing each month subsequent to June 2021 until the District changes its rates to be consistent with Proposition 218. The District changed its rates effective January 2023. The District’s position is that the Court decision is inconsistent with the Constitution, case law, and with recently-enacted bills that clarify both that rates based on peaking factors like Otay’s rates are valid (AB 1824) and that challengers are not entitled to refunds for Proposition 218 rate challenges (SB 1072). The matter has been remanded to the trial court for further proceedings as to the allocation of any refunds and for an award of attorneys fees. The estimated potential liability to the District, if the court were to award attorneys fees and damages, may be as high as $27M. Refundable Terminal Storage Fees The District has entered into an agreement with several developers whereby the developers prepaid the terminal storage fee in order to provide the District with the funds necessary to build additional storage capacity. The agreement further allows the developers to relinquish all or a portion of such water storage capacity. If the District grants to another property owner the relinquished storage capacity, the District shall refund to the applicable developer $746 per equivalent dwelling unit (EDU). There were 17,867 EDUs that were subject to this agreement. At June 30, 2024, 1,750 EDUs had been relinquished and refunded, 15,105 EDUs had been connected, and 1,012 EDUs have neither been relinquished nor connected. Developer Agreements The District has entered into various Developer Agreements with developers towards the expansion of District facilities. The developers agree to make certain improvements and after the completion of the projects, the District agrees to reimburse such improvements with a maximum reimbursement amount for each developer. Contractually, the District does not incur a liability for the work until the work is accepted by the District. 60 Notes To Financial Statements Year Ended June 30, 2024 10) COMMITMENTS AND CONTINGENCIES – Continued As of June 30, 2024, none of the outstanding developer projects had been completed. It is anticipated that the District will be liable for an amount not to exceed $685,000 at the point of acceptance. Accordingly, the District has accrued this amount as of year-end. 11) RISK MANAGEMENT General Liability and Property The District is exposed to various risks of loss related to torts, theft, damage and destruction of assets, errors and omissions, and natural disasters. The District is a member in an insurance pool through the Association of California Water Agencies Joint Powers Insurance Authority (ACWA JPIA). ACWA JPIA is a not-for-profit public agency formed under California Government Code Sections 6500 et. Seq. ACWA JPIA is governed by a board composed of members from participating agencies. The District pays an annual premium for commercial insurance covering general liability, excess liability, property, automobile, public employee dishonesty, and various other claims. Separate financial statements of ACWA JPIA may be obtained at ACWA JPIA 2100 Professional Drive, Roseville, CA 95661-3700. General and Auto Liability, Public Officials’ Errors and Omissions and Employment Practices Liability: Total limits of $5 million combined single limit at $5 million per occurrence, with excess aggregate coverage at $50 million subject to the following deductibles:  $50,000 per occurrence for third party general liability property damage;  $50,000 per occurrence for third party auto liability property damage; Excess Crime Coverage: Total of $1 million per loss includes Public Employee Dishonesty, Forgery or Alteration, Computer Fraud, Faithful Performance of Duty and Impersonation Fraud effective July 1, 2023. Property Loss: Replacement cost, for property on file, paid on an actual cash value basis, to a combined total of $372 million per occurrence, subject to a $25,000 deductible per occurrence, effective July 1, 2023. Boiler and Machinery: Replacement costs up to $100 million per occurrence, subject to a $25,000 deductible, effective July 1, 2023. 61 Notes To Financial Statements Year Ended June 30, 2024 11) RISK MANAGEMENT – Continued Comprehensive and Collision: Deductibles of $1,000, as elected; ACV limits; fully self-funded by ACWA, effective July 1, 2023. Workers’ Compensation Coverage and Employer’s Liability: Statutory limits per occurrence for Workers’ Compensation and $2.0 million for Employer’s Liability Coverage, subject to the terms, conditions and exclusions as provided in the Memorandum of Coverage, effective July 1, 2023. Cyber Coverage: $5 million Annual Program-Wide Aggregate Limit of Liability and $3 million maximum for each Insured/Member for Information Security & Privacy Liability. The policy includes a $100,000 deductible per claim, effective July 1, 2023. Fiduciary Coverage: $2 million aggregate limit of liability, subject to $150,000 deductible. Per incident limits of $1.5 million for HIPPA and HITECH fines/penalties and $250,000 for all else. 12) LEASES RECEIVABLE The District has entered into 32 cell site leases with lease terms ranging from less than one year to sixty years. The lessees are required to make annual fixed payments ranging from $29,532 to $60,503, with discount rates of 1.39%. As of June 30, 2024, the lease receivable is $46,269,966 and deferred inflows of resources is $43,410,817. The District recognized $1,619,301 of lease revenue during the fiscal year . 13) SEGMENT INFORMATION The District has issued Water and Wastewater Revenue Bonds in the previous fiscal years to finance certain capital improvements. While water and wastewater services are accounted for jointly in these financial statements, the investors in the Water Revenue Bonds rely solely on the revenues of the water services for repayment and the Wastewater Revenue Bonds solely on the revenues of the wastewater services for repayment. Summary of financial information for the water and wastewater services is presented for June 30, 2024 on the following pages: 62 Notes To Financial Statements Year Ended June 30, 2024 13) SEGMENT INFORMATION – Continued Water Wastewater Services Services Total Assets Cash and Investments 112,544,293$ 7,131,996$ 119,676,289$ Accounts Receivable, Net 16,349,717 221,071 16,570,788 Other Current Assets 5,088,633 289,250 5,377,883 Leases Receivable 46,269,966 - 46,269,966 Capital Assets 409,702,657 27,184,503 436,887,160 Total Assets 589,955,266 34,826,820 624,782,086 Deferred Outflows of Resources Deferred Actuarial Pension Costs 12,812,557 467,059 13,279,616 Deferred Actuarial OPEB Costs 11,685,281 520,831 12,206,112 Total Deferred Outflows of Resources 24,497,838 987,890 25,485,728 Liabilities Accounts Payable 16,790,220 52,266 16,842,486 Other Miscellaneous Liabilities 6,137,496 1,205,003 7,342,499 Other Current Liabilities 12,102,418 103,386 12,205,804 Revenue Bonds 86,606,906 2,823,856 89,430,762 Lease Payable 671,758 - 671,758 Subscription-Based IT Payable 4,914,393 - 4,914,393 Net Pension Liability 27,601,030 952,915 28,553,945 Net OPEB Liability 10,722,665 479,681 11,202,346 Other Non-current Liabilities 30,548,589 - 30,548,589 Total Liabilities 196,095,475 5,617,107 201,712,582 Deferred Inflows of Resources Deferred Actuarial OPEB Costs 843,812 26,462 870,274 Deferred Actuarial Pension Costs 21,458 (21,458) - Deferred Inflows from Leases 43,410,817 - 43,410,817 Total Deferred Inflows of Resources 44,276,087 5,004 44,281,091 Net Position Net Investment in Capital Assets 311,764,400 24,286,108 336,050,508 Restricted for Debt Service 3,636,078 - 3,636,078 Restricted for Capital Assets 3,083,883 - 3,083,883 Unrestricted 55,597,181 5,906,491 61,503,672 Total Net Position 374,081,542$ 30,192,599$ 404,274,141$ June 30, 2024 Condensed Statement of Net Position 63 Notes To Financial Statements Year Ended June 30, 2024 13) SEGMENT INFORMATION – Continued Water Wastewater Services Services Total Operating Revenues Water Sales 105,736,843$ -$ 105,736,843$ Wastewater Revenue - 3,494,312 3,494,312 Connection and Other Fees 3,253,313 665 3,253,978 Total Operating Revenues 108,990,156 3,494,977 112,485,133 Operating Expenses Cost of Water Sales 77,807,009 - 77,807,009 Wastewater - 2,400,881 2,400,881 Administrative and General 32,717,662 - 32,717,662 Depreciation 17,163,463 1,113,029 18,276,492 Total Operating Expenses 127,688,134 3,513,910 131,202,044 Operating Income (Loss)(18,697,978) (18,933) (18,716,911) Non-Operating Revenues (Expenses) Investment Earnings (Losses)6,269,121 124,402 6,393,523 Taxes and Assessments 5,777,012 - 5,777,012 Availability Charges 690,392 51,313 741,705 Gain (Loss) on Sale of Capital Assets (723,389) (1,671) (725,060) Rents and Leases 2,083,669 - 2,083,669 Miscellaneous Revenues 1,894,533 1,582 1,896,115 Donations (103,200) - (103,200) Interest Expense (4,050,569) (87,046) (4,137,615) Miscellaneous Expenses (27,463,732) (14,680) (27,478,412) Total Non-operating Revenues (Expenses)(15,626,163) 73,900 (15,552,263) Income (Loss) Before Capital Contributions and Transfers (34,324,141) 54,967 (34,269,174) Capital Contributions 7,432,482 35,804 7,468,286 Change in Net Position (26,891,659) 90,771 (26,800,888) Total Net Position, Beginning 400,973,201 30,101,828 431,075,029 Total Net Position, Ending 374,081,542$ 30,192,599$ 404,274,141$ Condensed Statement of Revenues, Expenses and Changes in Net Pension Year Ended June 30, 2024 64 Notes To Financial Statements Year Ended June 30, 2024 13) SEGMENT INFORMATION – Continued 14) SUBSEQUENT EVENT Effective September 1, 2024, the District created an HRA plan (a defined contribution plan) and closed the District’s current OPEB plan. Employees hired on or after September 1, 2024 are no longer eligible to enter the District’s OPEB plan. However, they are required to join the HRA plan. Employees hired prior to September 1, 2024 had the option to remain in the current OPEB plan or opt in to the HRA plan. Water Wastewater Services Services Total Net Cash Provided/(Used) by: Operating Activities 3,282,557$ 1,459,761$ 4,742,318$ Non-capital and Related Financing Activities 6,478,761 51,313 6,530,074 Capital and Related Financing Activities (6,801,389) (297,486) (7,098,875) Investing Activities 29,316,260 75,443 29,391,703 Net Increase(Decrease) in Cash and Cash Equivalents 32,276,189 1,289,031 33,565,220 Cash and Cash Equivalents, Beginning 40,988,806 5,842,965 46,831,771 Cash and Cash Equivalents, Ending 73,264,995$ 7,131,996$ 80,396,991$ For the Year Ended June 30, 2024 Condensed Statement of Cash Flows 65 This page intentionally left blank 66 Schedule of Changes in the Net OPEB Liability and Related Ratios for Measurement Periods Ended June 30, Last Ten Fiscal Years (1) Measurement Period 2023 2022 2021 2020 2019 2018 2017 Total OPEB Liability Service Cost 1,018,363$ 991,108$ 755,756$ 735,529$ 757,725$ 735,655$ 687,528$ Interest on the Total OPEB Liability 2,324,644 2,189,619 2,077,446 1,915,358 1,970,613 1,864,967 1,764,343 Actual and Expected Experience Difference 5,942,003 254,888 2,595,855 1,151,927 (2,029,118) - - Changes in Assumptions 41,042 - (1,557,334) - (345,110) - - Benefit Payment (1,214,348) (1,428,491) (1,201,678) (1,120,146) (1,141,344) (1,085,586) (1,039,420) Net Change in Total OPEB Liability 8,111,704 2,007,124 2,670,045 2,682,668 (787,234) 1,515,036 1,412,451 Total OPEB Liability - Beginning 34,537,166 32,530,042 29,859,997 27,177,329 27,964,563 26,449,527 25,037,076 Total OPEB Liability - Ending (a)42,648,870$ 34,537,166$ 32,530,042$ 29,859,997$ 27,177,329$ 27,964,563$ 26,449,527$ Plan Fiduciary Net Position Contributions - Employer 1,214,348$ 127,444$ 807,867$ 1,011,358$ 2,206,363$ 2,202,004$ 2,284,420$ Net Investment Income 1,969,238 (4,739,093) 7,880,863 983,790 1,595,092 1,734,626 2,011,985 Benefit Payments (1,214,348) (1,428,491) (1,201,678) (1,120,146) (1,141,344) (1,085,586) (1,039,420) Administrative Expenses (8,619) (9,034) (10,811) (13,514) (12,299) (11,784) (10,167) Net Change in Plan Fiduciary Net Position 1,960,619 (6,049,174) 7,476,241 861,488 2,647,812 2,839,260 3,246,818 Plan Fiduciary Net Position - Beginning 29,485,905 35,535,079 28,058,838 27,197,350 24,549,538 21,739,035 18,492,217 Plan Fiduciary Net Position - Ending (b)31,446,524$ 29,485,905$ 35,535,079$ 28,058,838$ 27,197,350$ 24,578,295$ 21,739,035$ Net OPEB Liability/(Asset) - Ending (a)-(b)11,202,346$ 5,051,261$ (3,005,037)$ 1,801,159$ (20,021)$ 3,386,268$ 4,710,492$ Plan Fiduciary Net Position as a Percentage of the Total OPEB Liability 73.73%85.37%109.24%94.00%100.10%87.80%82.20% Covered-Employee Payroll 14,393,757$ 14,054,264$ 14,006,918$ 13,538,959$ 13,176,602$ 12,677,000$ 12,513,000$ Net OPEB Liability/(Asset) as a Percentage of Covered-Employee Payroll 77.83%35.94%-21.45%13.30%-0.20%26.90%37.60% Notes to Schedule (1)Historical information is required only for measurement periods for which GASB 75 is applicable. Future years’ information will be displayed up to 10 years as information becomes available. Contributions are determined by an actuarial valuation based on eligible participants’ estimated medical and dental benefits. 67 Schedule of Contributions For Fiscal Year Ended June 30, Last Ten Fiscal Years (1) Actuarially Determined Contributions in Contribution Covered-Contributions as a Fiscal Contribution Relation to the Deficiency Employee Percentage of Covered- Year (ADC)ADC (Excess)Payroll Employee Payroll 2018 1,116,418$ (2,202,004)$ (1,085,586)$ 12,677,000$ 17.37% 2019 1,149,911 (2,206,363) (1,056,452) 13,176,602 16.74% 2020 1,011,358 (1,011,358) - 13,538,959 7.47% 2021 807,867 (807,867) - 14,006,918 5.77% 2022 - - - 14,054,264 0.00% 2023 - (1,394,881) (1,394,881) 14,393,757 9.69% 2024 1,138,661 (2,775,728) (1,637,067) 14,757,192 18.81% Notes to Schedule: Methods and assumptions used to determine contributions: Actuarial Cost Method Entry Age Acturial Cost Method Amortization Method/Period Level percent of payroll over a closed rolling 15-year period Asset Valuation Method Market value Inflation 2.50% Payroll Growth 2.75% Investment Rate of Return 6.75% Healthcare Cost-trend Rates 4.50% HMO/4.50% PPO Retirement Age Mortality The actuarial methods and assumptions used to set the actuarially determined contributions for Fiscal Year 2024 were from the June 30, 2023 actuarial valuation. Also note, that some of the data from prior years were updated with the most current available information. Tier 1 employees - 2.7% at 55 and Tier 2 employees - 2.0% at 62. The probabilities of Retirement are based on the 2021 CalPERS Experience Study. The mortality assumptions are based on the 2021 CalPERS Mortality for Miscellaneous and Schools Employees table created by CalPERS. (1)Historical information is required only for measurement periods for which GASB 75 is applicable. Future years’ information will be displayed up to 10 years as information becomes available. Contributions are determined by an actuarial valuation based on eligible participants’ medical and dental benefits. 68 Schedule of Changes in the Net Pension Liability and Related Ratios for Fiscal Years Ended June 30, Last Ten Fiscal Years Measurement Period 2023 2022 2021 2020 2019 Total Pension Liability Service Cost 2,989,611$ 2,994,291$ 2,662,845$ 2,623,208$ 2,586,911$ Interest 11,457,149 10,864,205 10,489,284 10,043,778 9,638,674 Changes in Benefit Terms 137,177 Changes in Assumptions - 4,984,447 - - - Difference Between Expected and actual Experience 3,092,819 174,717 705,426 260,337 1,183,213 Benefit Payments, including Refunds of Employee Contributions (8,834,436) (8,151,116) (7,304,947) (7,017,816) (6,658,719) Net Change in Total Pension Liability 8,842,320 10,866,544 6,552,608 5,909,507 6,750,079 Total Pension Liability - Beginning 165,738,046 154,871,502 148,318,894 142,409,387 135,659,308 Total Pension Liability - Ending (a)174,580,366$ 165,738,046$ 154,871,502$ 148,318,894$ 142,409,387$ Plan Fiduciary Net Position Net Plan to Plan Resource Movement -$ -$ -$ -$ -$ Contributions - Employer 5,458,992 3,928,187 3,945,147 2,437,119 36,706,983 Contributions - Employee 1,112,562 1,099,592 1,095,898 1,055,769 1,019,255 Net Investment Income 8,605,145 (11,584,615) 28,707,870 6,185,108 7,516,686 Benefit Payments, Including Refunds of Employee Contributions (8,834,436) (8,151,116) (7,304,947) (7,017,816) (6,658,719) Administrative Expenses (102,793) (96,301) (128,139) (177,337) (62,278) Other Changes in Fiduciary Net Position - - - - 203 Net Change in Plan Fiduciary Net Position 6,239,470 (14,804,253) 26,315,829 2,482,843 38,522,130 Plan Fiduciary Net Position - Beginning 139,786,951 154,591,204 128,275,375 125,792,532 87,270,402 Plan Fiduciary Net Position - Ending (b)146,026,421$ 139,786,951$ 154,591,204$ 128,275,375$ 125,792,532$ Plan Net Pension Liability/(Asset) - Ending (a)-(b)28,553,945$ 25,951,095$ 280,298$ 20,043,519$ 16,616,855$ Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 83.64%84.34%99.82%86.49%88.33% Covered Payroll 14,539,529$ 14,148,052$ 13,768,586$ 13,383,715$ 12,892,655$ Plan Net Pension Liability/(Asset) as a Percentage of Covered Payroll 196.39%183.43%2.04%149.76%128.89% Notes to Schedule: Changes in Benefit Terms: The figures above generally include any liability impact that may have resulted from voluntary benefit changes that occurred on or before the Measurement Date. However, offers of Two Years Additional Service Credit (a.k.a. Golden Handshakes) that occurred after the Valuation Date are not included in the figures above, unless the liability impact is deemed to be material by the plan actuary. In 2022, SB 1168 increased the standard retiree lump sum death benefit from $500 to $2,000 for any death occurring on or after July 1, 2023. The impact, if any, is included in the changes of benefit terms. Changes in Assumptions: There were no assumption changes in 2023. Effective with the June 30, 2021 valuation date (June 30, 2022 measurement date), the accounting discount rate was reduced from 7.15% to 6.90%. In determining the long-term expected rate of return, CalPERS took into account long-term market return expectations as well as the expected pension fund cash flows. In addition, demographic assumptions and the price inflation assumption were changed in accordance with the 2021 CalPERS Experience Study and Review of Actuarial Assumptions. The accounting discount rate was 7.15% for measurement date June 30, 2017 through June 30, 2021, 7.65% for measurement dates June 30, 2015 through June 30, 2016, and 7.50% for measurement date June 30, 2014. 69 Schedule of Changes in the Net Pension Liability and Related Ratios for Fiscal Years Ended June 30, Last Ten Fiscal Years Measurement Period 2018 2017 2016 2015 2014 Total Pension Liability Service Cost 2,528,271$ 2,556,902$ 2,298,617$ 2,250,860$ 2,330,709$ Interest 9,168,092 8,836,284 8,575,275 8,229,312 7,907,915 Changes in Assumptions (1,312,634) 7,308,486 - (1,996,819) - Difference Between Expected and actual Experience 461,917 (1,208,593) (613,440) (981,200) - Benefit Payments, including Refunds of Employee Contributions (5,995,949) (5,779,040) (5,448,218) (5,288,251) (4,885,406) Net Change in Total Pension Liability 4,849,697 11,714,039 4,812,234 2,213,902 5,353,218 Total Pension Liability - Beginning 130,809,611 119,095,572 114,283,338 112,069,436 106,716,218 Total Pension Liability - Ending (a)135,659,308$ 130,809,611$ 119,095,572$ 114,283,338$ 112,069,436$ Plan Fiduciary Net Position Net Plan to Plan Resource Movement (203)$ -$ -$ -$ -$ Contributions - Employer 4,441,517 4,105,810 3,819,770 3,557,098 3,137,174 Contributions - Employee 1,015,008 1,014,329 1,010,337 1,007,023 1,074,954 Net Investment Income 6,949,676 8,149,097 369,214 1,601,760 10,874,999 Benefit Payments, Including Refunds of Employee Contributions (5,995,949) (5,779,040) (5,448,218) (5,288,251) (4,885,406) Administrative Expenses (126,575) (109,029) (45,185) (83,511) - Other Changes in Fiduciary Net Position (240,367) - - - - Net Change in Plan Fiduciary Net Position 6,043,107 7,381,167 (294,082) 794,119 10,201,721 Plan Fiduciary Net Position - Beginning 81,227,295 73,846,128 74,140,210 73,346,091 63,144,370 Plan Fiduciary Net Position - Ending (b)87,270,402$ 81,227,295$ 73,846,128$ 74,140,210$ 73,346,091$ Plan Net Pension Liability/(Asset) - Ending (a)-(b)48,388,906$ 49,582,316$ 45,249,444$ 40,143,128$ 38,723,345$ Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 64.33%62.10%62.01%64.87%65.45% Covered Payroll 12,969,485$ 12,829,415$ 12,767,963$ 12,451,513$ 12,276,578$ Plan Net Pension Liability/(Asset) as a Percentage of Covered Payroll 373.10%386.47%354.40%322.40%315.42% Notes to Schedule: Changes in Benefit Terms: The figures above generally include any liability impact that may have resulted from voluntary benefit changes that occurred on or before the Measurement Date. However, offers of Two Years Additional Service Credit (a.k.a. Golden Handshakes) that occurred after the Valuation Date are not included in the figures above, unless the liability impact is deemed to be material by the plan actuary. In 2022, SB 1168 increased the standard retiree lump sum death benefit from $500 to $2,000 for any death occurring on or after July 1, 2023. The impact, if any, is included in the changes of benefit terms. Changes in Assumptions: There were no assumption changes in 2023. Effective with the June 30, 2021 valuation date (June 30, 2022 measurement date), the accounting discount rate was reduced from 7.15% to 6.90%. In determining the long-term expected rate of return, CalPERS took into account long-term market return expectations as well as the expected pension fund cash flows. In addition, demographic assumptions and the price inflation assumption were changed in accordance with the 2021 CalPERS Experience Study and Review of Actuarial Assumptions. The accounting discount rate was 7.15% for measurement date June 30, 2017 through June 30, 2021, 7.65% for measurement dates June 30, 2015 through June 30, 2016, and 7.50% for measurement date June 30, 2014. 70 Schedule of Plan Contributions for Fiscal Year Ended June 30, Last Ten Fiscal Years Actuarially Determined Contributions in Contribution Covered-Contributions as a Fiscal Contribution Relation to the Deficiency Employee Percentage of Covered- Year (ADC)(1)ADC(1)(Excess)Payroll(2)Employee Payroll(2) 2015 3,557,098$ (3,557,098)$ -$ 12,451,513$ 28.57% 2016 3,819,770 (3,819,770) -12,767,963 29.92% 2017 4,105,810 (4,105,810) -12,829,415 32.00% 2018 4,441,517 (4,441,517) -12,969,485 34.25% 2019 4,906,983 (36,706,983) (31,800,000) 12,892,655 284.71% 2020 2,437,119 (2,437,119) -13,383,715 18.21% 2021 2,765,952 (3,965,952) (1,200,000) 13,768,586 28.80% 2022 2,971,785 (3,960,785) (989,000) 14,148,052 28.00% 2023 3,163,698 (5,477,698) (2,314,000) 14,539,529 37.67% 2024 3,095,172 (3,095,172) 14,893,185 20.78% Notes to Schedule: Actuarial Cost Method Entry Age Acturial Cost Method Amortization Method/Period Asset Valuation Method Market value of assets Discount Rate 6.80% (net of investment and administrative expenses) Inflation 2.30% Salary Increases Varies by category, entry age and duration of service. Payroll Growth 2.80% (1)Employers are assumed to make contributions equal to the actuarially determined contributions. However, some employers may choose to make additional contributions toward their unfunded liability. Employer contributions for such plans exceed the actuarially determined contributions. Varies by date established and source. May be level dollar or level percent of pay and may include direct rate smoothing. (2)Includes three year’s payroll growth assumption using 2.80% payroll growth assumption for fiscal year 2024; 2.75% payroll growth assumption for fiscal years 2018-2023; and 3.00% payroll growth assumption for fiscal years 2015-2017. The actuarial methods and assumptions used to set the actuarially determined contributions for Fiscal Year 2023-24 were from the June 30, 2021 public agency valuations. Also note, that some of the data from prior years were updated with the most current available information. 71 This page intentionally left blank 72 Statistical Schedules The Statistical Schedule is part of understanding what the information in the financial statements, note disclosures, and required supplementary information says about the District’s overall financial health. Contents Page Financial Trends 74 These schedules contain trend information to help the reader understand how the District’s financial performance and well-being have changed over time. Revenue Capacity 81 These schedules contain information to help the reader assess the factors affecting the District’s ability to generate its potable and recycled water, and sewer sales as well as property tax. Debt 92 These schedules present information to help the reader assess the affordability of the District’s current levels of outstanding debt and the District’s ability to issue additional debt. Demographic and Economic Information 98 These schedules offer demographic and economic indicators to help the reader understand the environment within which the District’s financial activities take place and to help make comparisons over time and with other governments. Operating Information 100 These schedules contain information about the District’s operation and resources to help the reader understand how the District’s financial information relates to the services the District provides and the activities it performs. Sources Unless otherwise noted, the information in these schedules is derived from the annual comprehensive financial reports of the relevant year. 73 Fiscal Net Investment Total Year in Capital Assets Restricted Unrestricted Net Position 2024 336,050,508$ 6,719,961$ 61,503,672$ 404,274,141$ (1) 2023 341,227,728 6,522,740 83,324,561 431,075,029 2022 340,274,496 9,712,242 74,736,049 424,722,787 2021 340,383,389 4,187,443 60,680,243 405,251,075 2020 345,156,470 4,261,399 38,048,894 387,466,763 2019 354,639,520 4,248,007 28,707,083 387,594,610 2018 355,628,577 4,247,025 27,664,926 387,540,528 (2) 2017 350,981,714 4,306,724 45,898,551 401,186,989 2016 351,617,201 4,402,301 45,268,275 401,287,777 2015 354,046,090 4,658,306 43,717,930 402,422,326 (3) (1)For the Fiscal Year ending June 30, 2024, the $26.8 million decrease in Total Net Position is primarily due to the accrual of an estimated potential litigation-related expense of $27 million. (2)For Fiscal Year ending June 30, 2018, the $13.6 million decrease of Total Net Position is primarily a result of the implementation of GASB Statement No. 75 "Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions-an amendment of GASB Statement No. 45”. Implementation of this standard decreased the net position at July 1, 2017 by $17.8 million and recognized a net OPEB liability, deferred outflows of resources, and expenses related to the OPEB plan. (3)For Fiscal Year ending June 30, 2015, the $42.4 million decrease of Total Net Position is primarily due to the implementation of Governmental Accounting Standards Board (GASB) Statements No. 68 "Accounting and Financial Reporting for Pensions-an amendment of GASB Statement No. 27" and No. 71 "Pension Transitions for Contributions Made Subsequent to the Measurement Date-an amendment of GASB No. 68". Implementation of these standards resulted in a decrease of Net Position at July 1, 2014 by $40.4 million. Source: Otay Water District Net Position by Component - Last Ten Fiscal Years $0 $50,000 $100,000 $150,000 $200,000 $250,000 $300,000 $350,000 $400,000 $450,000 $500,000 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Total Net Position, in Thousands ($) 74 Water & Certificate of Water Revenue Deferred Net Fiscal Capital Assets Wastewater Participation Refunding GO Capital Related Unamortized Unamortized Amount on Investment in Year Net Revenue Bonds (COPS) Bonds Bonds Payable (1)Premium Discount Refunding Capital Assets 2024 436,887,160$ (65,965,000)$ -$ (24,020,000)$ -$ (6,580,032)$ (4,283,225)$ 11,605$ -$ 336,050,508$ 2023 443,451,773 (68,925,000) - (26,205,000) - (2,444,750) (4,661,361) 12,066 - 341,227,728 2022 446,747,676 (71,625,000) - (28,295,000) (720,000) (723,401) (5,122,306) 12,527 - 340,274,496 2021 451,562,404 (73,885,128) - (30,285,000) (1,425,000) - (5,596,875) 12,988 - 340,383,389 2020 456,522,770 (71,018,303) - (32,185,000) (2,105,000) - (6,071,446) 13,449 - 345,156,470 2019 458,309,347 (60,368,810) - (34,000,000) (2,755,000) - (6,546,017) - - 354,639,520 2018 450,850,563 (44,235,000) (7,600,000) (35,730,000) (3,390,000) - (4,273,693) 6,707 - 355,628,577 2017 450,196,950 (45,175,000) (8,200,000) (37,405,000) (3,995,000) - (4,639,116) 7,452 191,428 350,981,714 2016 453,968,546 (46,075,000) (8,800,000) (39,240,000) (4,580,000) - (5,004,539) 8,197 1,339,997 351,617,201 2015 459,191,394 (46,945,000) (45,195,000) (6,470,000) (5,150,000) - (1,590,201) 204,897 - 354,046,090 (1) Includes other capital borrowing and liabilities, such as lease and SBITA payable and accounts and retainage payable for capital purposes. Source: Otay Water District Net Investment in Capital Assets - Last Ten Fiscal Years $325,000 $330,000 $335,000 $340,000 $345,000 $350,000 $355,000 $360,000 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Net Investment in Capital Assets, in Thousands ($) 75 Total Income/ Operating Non-Operating (Loss) Before Changes Fiscal Operating Operating Income/Revenues/Capital Capital in Net Year Revenues Expenses (Loss) (Expenses) Contributions Contributions Position 2024 112,485,133$ 131,202,044$ (18,716,911)$ (15,552,263)$ (1)(34,269,174)$ 7,468,286$ (26,800,888)$ 2023 106,192,423 118,793,915 (12,601,492) 9,716,538 (2,884,954) 9,237,196 6,352,242 2022 108,754,598 109,227,308 (472,710) 6,675,262 6,202,552 13,269,160 19,471,712 2021 107,140,468 108,684,323 (1,543,855) 7,575,379 6,031,524 11,752,788 17,784,312 2020 95,938,809 106,987,896 (11,049,087) 3,979,308 (7,069,779) 6,941,932 (127,847) 2019 91,952,166 103,728,988 (11,776,822) 2,374,095 (9,402,727) 9,456,809 54,082 2018 97,473,772 105,734,349 (8,260,577) 2,923,999 (5,336,578) 9,506,192 4,169,614 2017 88,481,254 96,624,381 (8,143,127) 2,471,420 (5,671,707) 5,570,919 (100,788) 2016 78,876,307 89,669,543 (10,793,236) 2,687,368 (8,105,868) 6,971,319 (1,134,549) 2015 83,865,407 91,863,728 (7,998,321) 2,965,607 (5,032,714) 3,081,894 (1,950,820) (1)Non-operating expenses include the accrual of an estimated potential litigation-related expense of $27 million. Source: Otay Water District Changes in Net Position - Last Ten Fiscal Years -$30,000 -$25,000 -$20,000 -$15,000 -$10,000 -$5,000 $0 $5,000 $10,000 $15,000 $20,000 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Changes in Net Position, in Thousands ($) 76 Fiscal Connection and Percent Year Water Sales Wastewater Other Fees Total Change 2024 105,736,843$ 3,494,312$ 3,253,978$ 112,485,133$ 5.9% 2023 99,901,174 3,315,754 2,975,495 106,192,423 -2.4% 2022 102,807,098 3,073,326 2,874,174 108,754,598 1.5% 2021 101,742,970 2,899,180 2,498,318 107,140,468 11.7% 2020 90,435,148 2,921,310 2,582,351 95,938,809 4.3% 2019 86,756,222 2,961,157 2,234,787 91,952,166 -5.7% 2018 92,595,195 2,865,520 2,013,057 97,473,772 10.2% 2017 83,720,150 2,983,495 1,777,609 88,481,254 12.2% 2016 73,940,200 3,175,300 1,760,807 78,876,307 -5.9% 2015 79,135,000 3,044,158 1,686,249 83,865,407 -2.5% Source: Otay Water District Operating Revenues by Source - Last Ten Fiscal Years $0 $20,000 $40,000 $60,000 $80,000 $100,000 $120,000 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Operating Revenues, in Thousands ($) 77 Fiscal Cost of Administrative Percent Year Water Sales Wastewater and General Depreciation Total Change 2024 77,807,009$ 2,400,881$ 32,717,662$ 18,276,492$ 131,202,044$ 10.4% 2023 71,342,741 2,497,316 27,073,523 17,880,335 118,793,915 8.8% 2022 70,562,038 1,802,256 19,174,479 17,688,535 109,227,308 0.5% 2021 66,889,570 2,633,413 21,948,435 17,212,905 108,684,323 1.6% 2020 62,573,257 2,439,117 25,196,555 16,778,967 106,987,896 3.1% 2019 60,065,964 2,784,579 24,070,648 16,807,797 103,728,988 -1.9% 2018 62,321,213 2,501,240 23,445,578 17,466,318 105,734,349 9.4% 2017 56,882,487 1,964,855 19,991,542 17,785,497 96,624,381 7.8% 2016 51,826,046 2,051,913 19,318,247 16,473,337 89,669,543 -2.4% 2015 54,364,884 1,866,711 19,437,141 16,194,992 91,863,728 -0.8% Source: Otay Water District Operating Expenses by Function - Last Ten Fiscal Years $0 $20,000 $40,000 $60,000 $80,000 $100,000 $120,000 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Operating Expenses, in Thousands ($) Cost of Water Sales Wastewater Administrative and General Depreciation 78 Fiscal Investment Taxes and Availability Rents and Percent Year Earnings (Losses) Assessments Charges Leases Miscellaneous Total Change 2024 6,393,523$ 5,777,012$ 741,705$ 2,083,669$ 1,896,115$ 16,892,024$ 16.0% 2023 4,088,331 5,618,253 710,954 2,181,634 1,961,168 14,560,340 21.7% 2022 (1,506,486) 5,244,584 740,928 2,071,200 5,417,588 11,967,814 -6.8% 2021 254,668 5,251,540 686,697 1,587,687 5,062,779 12,843,371 18.3% 2020 1,784,834 4,939,950 694,768 1,501,328 1,936,162 10,857,042 -6.1% 2019 1,978,392 4,671,182 723,246 1,384,211 2,800,613 11,557,644 20.4% 2018 723,860 4,481,719 697,724 1,439,247 2,255,605 9,598,155 -10.6% 2017 408,754 4,114,583 729,325 1,375,305 4,107,558 10,735,525 20.7% 2016 758,004 3,966,593 616,591 1,281,150 2,274,623 8,896,961 -0.6% 2015 656,925 3,856,276 685,555 1,232,920 2,521,078 8,952,754 15.2% Source: Otay Water District Non-Operating Revenues by Source - Last Ten Fiscal Years $0 $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000 $16,000 $18,000 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Non-Operating Revenues, in Thousands ($) 79 Fiscal Interest Percent Year Donations (1)Expense Miscellaneous Total Change 2024 103,200$ 4,137,615$ 28,203,472$ (2)32,444,287$ 569.8% 2023 92,000 4,310,352 441,450 (3)4,843,802 -8.5% 2022 106,913 4,551,134 634,505 (4)5,292,552 0.5% 2021 84,389 4,782,490 401,113 (5)5,267,992 -23.4% 2020 121,600 4,953,987 1,802,147 (6)6,877,734 -25.1% 2019 118,040 4,713,883 4,351,626 (7)9,183,549 37.6% 2018 123,050 3,941,321 2,609,785 6,674,156 -19.2% 2017 125,742 5,069,767 3,068,596 (8)8,264,105 33.1% 2016 120,722 4,603,093 1,485,778 6,209,593 3.7% 2015 117,462 4,545,530 1,324,155 5,987,147 -25.6% (1)Donations are contributions to the Water Conservation Authority formed in 1999. (2) Miscellaneous expenses include $0.5 million of non-capitalizable expenses that were partially funded by capacity revenue, the disposal of capital assets resulting in a loss of $0.7 million, and the accrual of an estimated potential litigation-related expense of $27 million. (3) Miscellaneous expense includes $0.3 million of non-capitalizable expenses which were partially funded by capacity revenue and $0.1 million loss on disposal of capital assets. (4) Miscellaneous expense includes $0.4 million of non-capitalizable expenses which were partially funded by capacity revenue and $0.2 million loss on disposal of capital assets. (5) Miscellaneous expense includes $0.2 million of non-capitalizable expenses which were partially funded by capacity revenue and $0.2 million loss on disposal of capital assets. (6) Miscellaneous expense includes $0.4 million of non-capitalizable expenses which were partially funded by capacity revenue and $1.2 million loss on disposal of capital assets. (7) Miscellaneous expense includes $3.0 million of non-capitalizable expenses which were partially funded by capacity revenue and $1.1 million loss on disposal of capital assets. (8)Miscellaneous expense includes $1.8 million of non-capitalizable expenses which were primarily funded by capacity revenue. Source: Otay Water District Non-Operating Expenses by Function - Last Ten Fiscal Years $0 $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000 $16,000 $18,000 $20,000 $22,000 $24,000 $26,000 $28,000 $30,000 $32,000 $34,000 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Non-Operating Expenses, in Thousands ($) Miscellaneous Interest Expense Donations 80 Fiscal Total Direct Year Real Personal Total Tax Rate 2024 41,107,046,948$ 567,270,100$ 41,674,317,048 1.00% 2023 38,290,356,481 581,683,100 38,872,039,581 1.00% 2022 35,535,165,581 690,058,250 36,225,223,831 1.00% 2021 33,891,881,238 675,894,658 34,567,775,896 1.00% 2020 32,068,524,548 570,816,478 32,639,341,026 1.00% 2019 30,175,832,441 591,916,883 30,767,749,324 1.00% 2018 28,808,597,510 578,765,787 29,387,363,297 1.00% 2017 27,060,627,238 538,359,438 27,598,986,676 1.00% 2016 25,506,243,489 551,455,064 26,057,698,553 1.00% 2015 24,109,906,912 572,400,598 24,682,307,510 1.00% Source: County of San Diego Auditor and Controller Last Ten Fiscal Years Assessed Valuation of Taxable Property within the District - $0 $5,000,000 $10,000,000 $15,000,000 $20,000,000 $25,000,000 $30,000,000 $35,000,000 $40,000,000 $45,000,000 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Assessed Valuation of Property, In Thousands ($) 81 Fiscal Year Purchases Sales Production Purchases Sales 2024 11,959,703 11,268,054 426,020 969,274 1,391,760 2023 11,659,139 11,235,904 381,240 1,071,607 1,428,385 2022 12,906,784 12,310,217 436,600 1,279,005 1,685,259 2021 13,079,077 12,604,100 281,830 1,598,358 (2)1,799,377 2020 11,995,858 11,390,483 382,670 1,070,079 (3)1,451,957 2019 11,928,819 11,326,752 323,690 1,168,780 1,462,632 2018 12,910,269 12,227,383 377,450 1,460,271 1,810,502 2017 11,762,115 11,250,331 242,800 1,386,600 1,625,768 2016 11,108,105 10,475,290 439,650 1,163,117 1,591,677 2015 13,198,201 12,744,425 443,090 1,447,737 1,841,956 (1)Rates are not presented on this schedule because the District has multiple water rates for various meter sizes and customer classes and cannot represent rates in a meaningful manner with a weighted average rate. See Water and Sewer rates on pages 86-90 for meter sizes and their corresponding water rates. (2)In FY 2021, recycled water purchases from the City of San Diego increased due to the District's plant being shut down from November 2020 through February 2021 for capital improvements. (3)In FY 2020, recycled water purchases from the City of San Diego declined due to the City's plant being shut down from January to June of 2020. Source: Otay Water District Per 100 Cubic Feet Water Purchases, Production, and Sales - Last Ten Fiscal Years Recycled Water(1) Per 100 Cubic Feet Potable Water(1) 0 5,000,000 10,000,000 15,000,000 20,000,000 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Recycled Purchases Recycled Production Potable Purchases Water Purchases, Productions, and Sales, in Hundred Cubic Feet (HCF) 82 Fiscal Year Total(1) 2024 171 13 184 2023 203 21 224 2022 200 18 218 2021 270 27 297 2020 302 4 306 2019 463 12 475 2018 574 14 588 2017 109 9 118 2016 116 4 120 2015 138 8 146 (1) Meters may not be activated in the year sold. Source: Otay Water District Meter Sales by Type - Last Ten Fiscal Years Potable Recycled 0 200 400 600 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Meter Sales by Type Recycled Potable 83 Fiscal Year Potable Recycled Sewer Total 2024 51,853 798 4,750 57,401 2023 51,604 782 4,744 57,130 2022 51,389 768 4,738 56,895 2021 51,204 753 4,736 56,693 2020 50,994 735 4,737 56,466 2019 50,555 726 4,737 56,018 2018 50,045 724 4,714 55,483 2017 49,502 721 4,683 54,906 2016 49,425 708 4,677 54,810 2015 49,308 705 4,679 54,692 Source: Otay Water District Number of Customers by Service Type - Last Ten Fiscal Years 0 7,500 15,000 22,500 30,000 37,500 45,000 52,500 60,000 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Number of Customers by Service Type Potable Sewer Recycled 84 Fiscal Year 1% Property Tax Special Assessments Total Levies Total Collections (1) End of the Year Percent Collected 2024 $ 5,711,012 $ 1,349,214 $ 7,060,226 $ 7,001,401 99% 2023 5,261,764 1,642,529 6,904,293 6,808,246 99% 2022 4,737,353 2,134,710 6,872,063 6,642,853 97% 2021 4,469,198 2,007,723 6,476,921 6,377,533 98% 2020 4,203,245 2,013,450 6,216,694 6,122,835 98% 2019 4,036,261 2,023,939 6,060,200 5,955,998 98% 2018 3,795,363 1,960,771 5,756,134 5,691,467 99% 2017 3,539,836 1,999,480 5,539,316 5,532,395 100% 2016 3,367,615 1,998,874 5,366,489 5,127,563 96% 2015 3,276,296 2,012,420 5,288,716 5,071,336 96% (1) Levies and collections include Current Secured, Current Unsecured, and Supplemental Homeowners Exemptions. Source: Otay Water District Property Tax Levies and Collections - Last Ten Fiscal Years $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $8,000 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Levies and Collections, in Thousands ($) Levies Collections 85 Fixed Rates 2024 2023 2022 2021 2020 2019 2018 2017 2016 2015 System Charge by Meter Size Residential Potable ¾"19.24$ 18.07$ 20.08$ 19.27$ 18.87$ 18.05$ 17.38$ 15.91$ 18.91$ 19.39$ 1"23.92 22.47 28.39 27.24 26.67 25.51 24.56 22.47 26.71 27.39 1 ½"35.91 33.73 49.11 47.12 46.13 44.13 42.49 38.88 46.22 47.40 2"50.07 47.04 73.98 70.98 69.49 66.47 64.00 58.55 69.61 71.39 ¾"17.75 16.67 44.17 42.38 41.49 39.69 38.21 15.91 18.91 19.39 1"21.44 20.14 62.37 59.84 58.59 56.05 53.97 22.47 26.71 27.39 1 ½"30.93 29.06 107.92 103.55 101.38 96.98 93.37 38.88 46.22 47.40 2"42.13 39.58 162.53 155.94 152.67 146.04 140.61 58.55 69.61 71.39 3"88.98 83.59 308.22 295.73 289.53 276.96 266.66 111.04 132.02 135.41 4"149.93 140.85 472.17 453.03 443.54 424.28 408.50 170.10 202.24 207.43 6"294.21 276.38 927.63 890.03 871.38 833.54 802.55 334.18 397.31 407.50 8"454.24 426.72 1,474.12 1,414.36 1,384.73 1,324.59 1,275.34 531.05 631.37 647.56 10"696.54 654.34 2,111.67 2,026.07 1,983.62 1,897.47 1,826.91 760.72 904.44 927.63 ¾"19.40 18.22 41.61 39.92 39.08 37.38 35.99 15.91 18.91 19.39 1"24.19 22.72 58.75 56.37 55.19 52.79 50.83 22.47 26.71 27.39 1 ½"36.43 34.22 101.66 97.54 95.50 91.35 87.95 38.88 46.22 47.40 2"50.90 47.82 153.11 146.90 143.82 137.57 132.45 58.55 69.61 71.39 3"108.17 101.62 290.34 278.57 272.73 260.89 251.19 111.04 132.02 135.41 4"184.48 173.30 444.76 426.73 417.79 399.65 384.79 170.10 202.24 207.43 6"370.98 348.50 873.81 838.39 820.82 785.17 755.97 334.18 397.31 407.50 8"585.87 550.37 1,388.56 1,332.27 1,304.36 1,247.71 1,201.32 531.05 631.37 647.56 10"904.94 850.11 1,989.08 1,908.45 1,868.46 1,787.32 1,720.86 760.72 904.44 927.63 ¾"18.06 16.97 41.61 39.92 39.08 37.38 35.99 15.91 18.91 19.39 1"21.97 20.64 58.75 56.37 55.19 52.79 50.83 22.47 26.71 27.39 1 ½"32.00 30.06 101.66 97.54 95.50 91.35 87.95 38.88 46.22 47.40 2"43.84 41.18 153.11 146.90 143.82 137.57 132.45 58.55 69.61 71.39 3"92.70 87.08 290.34 278.57 272.73 260.89 251.19 111.04 132.02 135.41 4"156.63 147.14 444.76 426.73 417.79 399.65 384.79 170.10 202.24 207.43 6"309.09 290.36 873.81 838.39 820.82 785.17 755.97 334.18 397.31 407.50 8"479.79 450.72 1,388.56 1,332.27 1,304.36 1,247.71 1,201.32 531.05 631.37 647.56 10"736.97 692.32 1,989.08 1,908.45 1,868.46 1,787.32 1,720.86 760.72 904.44 927.63 ¾"17.17 16.13 35.13 33.71 33.00 31.57 30.40 15.91 18.91 19.39 1"20.48 19.24 49.62 47.61 46.61 44.59 42.93 22.47 26.71 27.39 1 ½"29.02 27.26 85.86 82.38 80.65 77.15 74.28 38.88 46.22 47.40 2"39.06 36.69 129.28 124.04 121.44 116.17 111.85 58.55 69.61 71.39 3"82.25 77.26 245.19 235.25 230.32 220.32 212.13 111.04 132.02 135.41 4"137.83 129.48 375.63 360.40 352.85 337.53 324.98 170.10 202.24 207.43 6"267.29 251.10 737.94 708.03 693.20 663.10 638.44 334.18 397.31 407.50 8"408.14 383.41 1,172.69 1,125.15 1,101.58 1,053.74 1,014.56 531.05 631.37 647.56 10"623.52 585.74 1,679.86 1,611.76 1,577.99 1,509.46 1,453.33 760.72 904.44 927.63 Water Fixed Rates - Last Ten Fiscal Years Non-Public Irrigation and Commercial Agricultural Potable Business & Commercial Potable Multi-Residential Potable Public Agency Potable 86 Fixed Rates 2024 2023 2022 2021 2020 2019 2018 2017 2016 2015 Water Fixed Rates - Last Ten Fiscal Years System Charge by Meter Size ¾"17.17$ 16.13$ 35.13$ 33.71$ 33.00$ 31.57$ 30.40$ 15.91$ 18.91$ 19.39$ 1"20.48 19.24 49.62 47.61 46.61 44.59 42.93 22.47 26.71 27.39 1 ½"29.02 27.26 85.86 82.38 80.65 77.15 74.28 38.88 46.22 47.40 2"39.06 36.69 129.28 124.04 121.44 116.17 111.85 58.55 69.61 71.39 3"82.25 77.26 245.19 235.25 230.32 220.32 212.13 111.04 132.02 135.41 4"137.83 129.48 375.63 360.40 352.85 337.53 324.98 170.10 202.24 207.43 ¾"17.65 16.58 35.13 33.71 33.00 31.57 30.40 15.91 18.91 19.39 1"21.27 19.98 49.62 47.61 46.61 44.59 42.93 22.47 26.71 27.39 1 ½"30.60 28.75 85.86 82.38 80.65 77.15 74.28 38.88 46.22 47.40 2"41.61 39.09 129.28 124.04 121.44 116.17 111.85 58.55 69.61 71.39 3"87.83 82.51 245.19 235.25 230.32 220.32 212.13 111.04 132.02 135.41 4"147.87 138.91 375.63 360.40 352.85 337.53 324.98 170.10 202.24 207.43 6"289.63 272.08 737.94 708.03 693.20 663.10 638.44 334.18 397.31 407.50 8"446.42 419.37 1,172.69 1,125.15 1,101.58 1,053.74 1,014.56 531.05 631.37 647.56 10"684.13 642.67 1,679.86 1,611.76 1,577.99 1,509.46 1,453.33 760.72 904.44 927.63 ¾"38.39 36.06 43.74 41.54 40.21 38.14 36.85 15.91 18.91 19.39 1"51.98 48.83 61.76 58.65 56.78 53.86 52.04 22.47 26.71 27.39 1 ½"86.46 81.22 106.89 101.51 98.27 93.21 90.06 38.88 46.22 47.40 2"127.46 119.74 160.98 152.88 148.00 140.38 135.63 58.55 69.61 71.39 3"279.35 262.42 305.28 289.91 280.65 266.21 257.21 111.04 132.02 135.41 4"487.54 458.00 467.65 444.11 429.92 407.80 394.01 170.10 202.24 207.43 6"1,014.90 953.41 918.73 872.49 844.62 801.16 774.07 334.18 397.31 407.50 8"1,567.04 1,547.17 1,459.97 1,386.49 1,342.20 1,273.13 1,230.08 531.05 631.37 647.56 10"2,567.06 2,411.52 2,091.41 1,986.14 1,922.69 1,823.75 1,762.08 760.72 904.44 927.63 ¾"38.39 36.06 36.93 35.07 33.95 32.20 31.11 15.91 18.91 19.39 1"51.98 48.83 52.16 49.53 47.95 45.48 43.94 22.47 26.71 27.39 1 ½"86.46 81.22 90.25 85.71 82.97 78.70 76.04 38.88 46.22 47.40 2"127.46 119.74 135.90 129.06 124.94 118.51 114.50 58.55 69.61 71.39 3"279.35 262.42 257.73 244.76 236.94 224.75 217.15 111.04 132.02 135.41 4"487.54 458.00 394.84 374.97 362.99 344.31 332.67 170.10 202.24 207.43 6"1,014.90 953.41 787.55 747.91 724.02 686.76 663.54 334.18 397.31 407.50 8"1,567.04 1,547.17 1,232.66 1,170.62 1,133.22 1,074.91 1,038.56 531.05 631.37 647.56 10"2,567.06 2,411.52 1,765.77 1,676.89 1,623.32 1,539.79 1,487.72 760.72 904.44 927.63 Line Size ¾"2.77 2.60 24.00 23.03 22.55 21.57 20.77 20.77 24.69 25.32 Line Size 1"2.85 2.68 24.00 23.03 22.55 21.57 20.77 20.77 24.69 25.32 Line Size 1 ½"3.13 2.94 24.00 23.03 22.55 21.57 20.77 20.77 24.69 25.32 Line Size 2"3.59 3.38 24.00 23.03 22.55 21.57 20.77 20.77 24.69 25.32 Line Size 3"5.31 4.99 24.00 23.03 22.55 21.57 20.77 20.77 24.69 25.32 Line Size 4"8.25 7.75 32.34 31.03 30.38 29.06 27.98 27.98 33.27 34.12 Line Size 6"18.83 17.69 32.34 31.03 30.38 29.06 27.98 27.98 33.27 34.12 Line Size 8"37.08 34.83 32.34 31.03 30.38 29.06 27.98 27.98 33.27 34.12 Line Size 10"64.51 60.61 32.34 31.03 30.38 29.06 27.98 27.98 33.27 34.12 Fire Services Potable Recycled Irrigation Recycled Commercial Construction Potable Public Irrigation Potable 87 Fixed Rates 2024 2023 2022 2021 2020 2019 2018 2017 2016 2015 Water Fixed Rates - Last Ten Fiscal Years CWA and MWD Pass-through Charges by Meter Size Residential Potable ¾"17.19$ 16.33$ 17.00$ 16.36$ 15.56$ 15.10$ 15.45$ 15.00$ 16.84$ 13.67$ 1"28.65 27.22 31.57 30.38 28.89 28.04 28.68 27.84 31.24 25.35 1 ½"57.27 54.42 71.36 68.67 65.31 63.40 64.85 62.96 70.66 57.35 Non-Residential & Other Potable ¾"17.19 16.33 17.00 16.36 15.56 15.10 15.45 15.00 16.84 13.67 1"28.65 27.22 31.57 30.38 28.89 28.04 28.68 27.84 31.24 25.35 1 ½"57.27 54.42 71.36 68.67 65.31 63.40 64.85 62.96 70.66 57.35 2"91.62 87.06 121.39 116.81 111.10 107.84 110.30 107.08 120.17 97.53 3"200.43 190.45 258.17 248.44 236.29 229.36 234.60 227.75 255.60 207.44 4"360.77 342.81 413.41 397.83 378.38 367.29 375.68 364.72 409.32 332.20 6"801.71 761.79 846.28 814.38 774.56 751.85 769.02 746.59 837.89 680.02 8"1,374.34 1,305.91 1,366.65 1,315.14 1,250.83 1,214.16 1,241.89 1,205.65 1,353.09 1,098.15 10"2,176.04 2,067.69 1,967.12 1,892.97 1,800.41 1,747.63 1,787.55 1,735.39 1,947.62 1,580.67 Source: Otay Water District 88 Water Rate 2024 2023 2022 2021 2020 2019 2018(1)2017 2016 2015 Tier 1 (conservation tier)-$ -$ -$ -$ -$ -$ -$ 2.53$ 2.13$ 1.95$ Tier 2 5.60 5.26 3.52 3.38 3.31 3.17 3.05 3.95 3.32 3.04 Tier 3 6.08 5.71 6.30 6.04 5.91 5.65 5.44 5.13 4.32 3.95 Tier 4 6.76 6.35 8.12 7.79 7.63 7.30 7.03 7.90 6.65 6.08 Tier 1 5.56 5.22 3.29 3.16 3.09 2.96 2.85 3.90 3.28 3.00 Tier 2 6.01 5.65 5.97 5.73 5.61 5.37 5.17 5.05 4.25 3.89 Tier 3 6.23 5.85 7.35 7.05 6.90 6.60 6.35 7.80 6.56 6.00 Tier 1 5.88 5.52 4.17 4.00 3.92 3.75 3.61 4.17 3.51 3.21 Tier 2 4.23 3.56 3.26 Tier 3 4.30 3.62 3.31 Government Fee (2)- - 0.43 0.42 0.42 0.42 0.41 0.41 0.37 0.32 Tier 1 6.47 6.08 4.17 4.00 3.92 3.75 3.61 4.17 3.51 3.21 Tier 2 4.23 3.56 3.26 Tier 3 4.30 3.62 3.31 Tier 1 6.77 6.36 6.09 5.84 5.72 5.47 5.27 5.68 4.78 4.37 Tier 2 5.74 4.83 4.42 Tier 3 5.81 4.89 4.47 Government Fee (2)- - 0.43 0.42 0.42 0.42 0.41 0.41 0.37 0.32 Tier 1 7.39 6.94 6.09 5.84 5.72 5.47 5.27 5.68 4.78 4.37 Tier 2 5.74 4.83 4.42 Tier 3 5.81 4.89 4.47 Tier 1 6.73 6.32 6.09 5.84 5.72 5.47 5.27 5.68 4.78 4.37 Tier 2 5.74 4.83 4.42 Tier 3 5.81 4.89 4.47 Tier 1 5.24 4.92 3.58 3.40 3.29 3.12 3.01 3.53 2.97 Tier 2 3.60 3.03 Tier 3 3.65 3.07 Tier 1 5.71 5.36 5.05 4.80 4.65 4.41 4.26 4.85 4.08 3.73 Tier 2 4.92 4.14 3.79 Tier 3 4.99 4.20 3.84 Government Fee (2)- - 0.43 0.42 0.42 0.42 0.41 0.41 0.37 0.32 Tier 1 5.82 5.47 5.05 4.80 4.65 4.41 4.26 4.85 4.08 3.73 Tier 2 4.92 4.14 3.79 Tier 3 4.99 4.20 3.84 Energy Pumping Fee (4) Potable 0.075 0.068 0.063 0.063 0.060 0.056 0.053 0.044 0.072 0.050 Recycled 0.089 0.077 0.063 0.063 0.060 0.056 0.053 0.044 0.072 0.050 (1) Effective 2018, there is no conservation tier for residential customer class and only one tier for all non-residential customer classes. (2) An additional charge per unit was assessed to governmental customers in lieu of tax revenues. This fee was eliminated in 2023. (3) This classification was created in Fiscal Year 2016, prior to this the customers paid the Recycled Non-Public Irrigation Rate. (4) Water customers are charged an energy pumping charge based on the quantity of water used and the elevation to which the water has been lifted to provide service. The energy pumping charge is the rate per 100 cubic feet of water for each 100 feet of lift above the base elevation of 450 feet. All water customers are in one of twenty-nine zones based on elevation. Source: Otay Water District Recycled Public Irrigation Construction Water Variable Rates - Last Ten Fiscal Years Recycled Non-Public Irrigation Recycled Commercial (3) Business & Commercial Non-Public Irrigation and Commercial Agricultural Multi Residential Residential Public Agency Public Irrigation 89 Description 2024 2023 2022 2021* 2020 2019 2018 2017 2016 2015 Per Unit 3.40$ 3.25$ 3.11$ 2.96$ 2.93$ 2.67$ 2.77$ 2.58$ 2.46$ 2.46$ Low Strength 3.40 3.25 3.11 2.96 2.93 2.67 2.77 2.58 2.46 2.46 Medium Strength 3.87 3.69 3.54 3.37 3.64 3.31 3.98 3.70 3.53 3.53 High Strength 5.45 5.20 4.98 4.75 5.01 4.56 6.34 5.90 5.63 5.63 ¾" & 1"18.99 18.13 17.37 16.55 16.38 14.91 17.08 15.89 27.07 15.89 ¾"18.99 18.13 17.37 16.55 16.38 14.91 30.50 28.37 27.07 27.07 1"47.45 45.30 43.41 41.36 40.94 37.27 44.94 41.80 39.86 39.86 1 ½"94.88 90.58 86.80 82.71 81.88 74.55 80.92 75.27 71.82 71.82 2"151.80 144.92 138.88 132.33 131.00 119.27 124.12 115.46 110.17 110.17 3"284.65 271.74 260.41 248.13 245.64 223.64 224.93 209.24 199.66 199.66 4"474.41 452.90 434.02 413.55 409.40 372.73 368.97 343.23 327.51 327.51 6"948.82 905.79 868.03 827.09 818.79 745.45 729.04 678.18 647.12 647.12 8"1,518.13 1,449.29 1,388.87 1,323.36 1,310.08 1,192.73 1,161.15 1,080.14 1,030.67 1,030.67 10"2,182.31 2,083.35 1,996.50 1,902.34 1,883.23 1,714.54 1,665.25 1,549.07 1,478.12 1,478.12 Calculation of Monthly Residential Sewer Billing: Bill calculation beginning calendar year 2008: (Winter Average(1) x .85(2) x Sewer Rate) + Fixed Rate(3) *Bill calculation beginning calendar year 2021: (3-Year Winter Average(4) x .85 (2) x Sewer Rate) + Fixed Rate(3) Calculation of Monthly Non-Residential Sewer Billing: Footnotes: (1) The winter average for a residential customer is defined as the units of water billed from January through April of the previous calendar year divided by four. (2)Flow is reduced by 15% to reflect that not all water purchased is disposed of into the public sewer system. (3)The fixed rate is based on the size of the water meter. (4) The three-year winter average is defined as the sum of prior three years annual winter average divided by three. The annual winter average is defined as the units of water billed from January through April divided by four. (5) The average annual usage is defined as the units of water billed from January through December of previous year. (6)The Sewer Rate is a per unit charge based on the non-residential account's strength factor as shown on the rates table as being either Low, Medium, or High. Source: Otay Water District (Average Annual Usage(5) x .85(2) x Sewer Rate(6)) + Fixed Rate(3) Residential Non-Residential Residential Non-Residential Sewer Variable and Fixed Rates - Last Ten Fiscal Years Fixed Rates Sewer Rates 90 Customer Name Customer Type Annual Revenues % of Water Sales 1. City of Chula Vista Publicly Owned 5,707,119$ 5.4% 2. State of California Publicly Owned 3,164,569 3.0% 3. Sweetwater School District Publicly Owned 1,928,357 1.8% 4. County of San Diego Publicly Owned 1,873,916 1.8% 5. Chula Vista School District Publicly Owned 1,293,268 1.2% 6. Calpine-Otay Mesa Energy Center Commercial 1,027,445 1.0% 7. Eastlake III Community Commercial 998,227 0.9% 8. Elite Athlete Services, LLC Commercial 830,521 0.8% 9. Eastlake Country Club Commercial 816,287 0.8% 10. Southwestern College Publicly Owned 596,328 0.6% Total Top Ten Customers 18,236,037$ 17.3% Other Customers 87,500,806 82.7% Total Water Sales 105,736,843$ 100.0% Customer Name Customer Type Annual Revenues % of Water Sales 1. City of Chula Vista Publicly Owned 3,508,939$ 4.4% 2. County of San Diego Publicly Owned 950,461 1.2% 3. State of California Publicly Owned 833,907 1.1% 4. Eastlake III Community Commercial 781,004 1.0% 5. Steele Canyon Golf Club LLC Commercial 735,908 0.9% 6. Chula Vista School District Publicly Owned 541,036 0.7% 7. Sweetwater School District Publicly Owned 379,353 0.5% 8. SANDAG Commercial 376,714 0.5% 9. Eastlake 1 HOA Commercial 364,252 0.5% 10. Rolling Hills Ranch Comm Assoc Commercial 303,611 0.4% Total Top Ten Customers 8,775,185$ 11.1% Other Customers 70,359,815 88.9% Total Water Sales 79,135,000$ 100.0% Source: Otay Water District Ten Largest Customers - Current Year and Nine Years Ago Fiscal Year 2024 Fiscal Year 2015 91 As a Share Fiscal Population GO Revenue Lease Subscription-Based Per of Personal Year Estimate Bond COPS Bonds Payable IT Payable Total Capita Income (7) 2024 240,000 -$ -$ 94,256,620$ 690,539$ 5,294,431$ (5)100,241,590$ 417.67$ 0.82% 2023 240,000 - - 99,779,295 707,727 85,348 (6)100,572,370 419.05 0.84% 2022 228,000 722,726 - 105,027,053 723,401 (4)- 106,473,180 466.99 0.91% 2021 226,000 1,444,080 - 110,029,807 - - 111,473,887 493.25 0.99% 2020 226,000 2,140,435 - 114,762,562 (2)- - 116,902,997 517.27 1.00% 2019 225,000 2,806,789 - 116,189,228 (3)- - 118,996,017 528.87 0.93% 2018 225,000 3,458,143 7,593,293 84,170,550 - - 95,221,986 423.21 0.73% 2017 224,000 4,079,498 8,192,548 87,134,618 - - 99,406,664 443.78 0.80% 2016 220,000 4,680,853 8,791,803 (1)90,218,686 - - 103,691,342 471.32 0.86% 2015 217,000 5,267,208 44,990,103 54,887,993 - - 105,145,304 484.54 0.90% (1)2007 COPS were refunded with the issuance of 2016 Water Revenue Refunding Bonds in May 2016. (2)In December 2019, the District issued $3,120,000 in Wastewater Revenue Bonds to pay for certain capital improvements to the District's wastewater system. (3)In November 2018, the District issued $32,435,000 in Water Revenue Bonds, Series 2018, of which a portion of the proceeds was used to advance refund $6,900,000 of the 1996 Certificates of Participation. (4)The District is a lessee for an antenna site lease that required annual fixed payments with a lease term of forty-eight years. Lease payable is measured at the present value of payments expected to be made during the lease term. (5)The District entered into a 30-month and a 15-year Subscription-Based IT Arrangements (SBITA) in FY2024 that required the District to make annual fixed payments. SBITA payable is measured at the present value of payments expected to be made during the subscription terms. (6)The District entered into two 36-month and one 14-month Subscription-Based IT Arrangements (SBITA) in FY2023 that required the District to make annual fixed payments. SBITA payable is measured at the present value of payments expected to be made during the subscription terms. (7)See the Demographics and Economic Statistics schedule on page 99 for personal income data. Per Capita Personal Income used in the calculation of "As a Share of Personal Income" is updated annually for the last ten fiscal years based on the most recent LAEDC economic reports published. The Share of Personal Income is therefore adjusted to reflect the economic data update. Source: Otay Water District Ratios of Outstanding Debt by Type - Last Ten Fiscal Years $0 $100 $200 $300 $400 $500 $600 $700 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Outstanding Debt Per Capita 92 Adjusted Net Revenues Fiscal Adjusted Operating Available for Debt Service Requirements (3)Coverage Year Revenues (1)Expenses (2)Debt Service Principal Interest Total Factor (4) 2024 129,703,143$ 137,537,348$ (7,834,206)$ 5,070,000$ 4,417,886$ 9,487,886$ -83%(5) 2023 119,198,005 98,660,691 20,537,314 4,720,000 4,667,830 9,387,830 219% 2022 119,990,007 86,853,307 33,136,700 4,480,000 4,892,778 9,372,778 354% 2021 118,995,389 85,872,652 33,122,737 4,275,000 5,108,566 9,383,566 353% 2020 105,820,913 88,223,522 17,597,391 4,075,000 5,289,640 9,364,640 188% 2019 103,126,288 85,243,519 17,882,769 3,405,000 5,037,638 8,442,638 212% 2018 110,274,227 86,437,355 23,836,872 3,215,000 4,334,368 7,549,368 316% 2017 94,551,308 79,062,983 15,488,325 3,335,000 4,420,433 7,755,433 200% 2016 85,417,850 72,117,631 13,300,219 3,120,000 4,640,947 7,760,947 171% 2015 89,646,845 74,320,591 15,326,254 2,945,000 4,767,618 7,712,618 199% (1)Adjusted revenues exclude sewer revenues and taxes collected for Improvement District 27 and are inclusive of capacity fees. (2)Adjusted operating expenses exclude sewer expenses and depreciation expense. (3) Pledge debts are Revenue Bonds. (4) The District's bond covenants require a minimum coverage factor of 125%. (5) The estimated potential liability for attorneys’ fees and damages from the Coziahr v. Otay Water District litigation of $27 million (“Estimated Potential Liability”) have been accrued in Fiscal Year 2023-24. The Estimated Potential Liability is anticipated to be paid, if and when due, from the District’s reserves and is not expected to impact the District’s ability in future years to comply with its covenant to fix rates and charges to produce Taxes and Net Revenues pledged to the water revenue bonds and/or installment payments at least equal to 125% of Debt Service. See “Management’s Discussion and Analysis” for further explanation. Source : Otay Water District Pledged Revenue Coverage (Water) - Last Ten Fiscal Years -200% -100% 0% 100% 200% 300% 400% 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Coverage Factor, in Percentage (%) Actual Ratio Minimum ratio 93 Adjusted Net Revenues Fiscal Sewer Operating Available for Debt Service Requirements (4)Coverage Year Revenues Expenses (3)Debt Service Principal Interest Total Factor (5) 2024 3,767,973$ 2,415,560$ 1,352,413$ 75,000$ 86,585$ 161,585$ 837% 2023 3,516,361 2,562,144 954,217 70,000 88,229 158,229 603% 2022 3,192,268 1,861,910 1,330,358 65,000 89,658 154,658 860% 2021 3,075,276 2,677,205 398,071 - 86,500 86,500 460% 2020 (2)3,061,829 2,439,432 622,397 - 50,154 50,154 1241% (1)No wastewater revenue bonds were issued between FY 2015 and FY 2019. (2)In December 2019, the District issued $3,120,000 in Wastewater Revenue Bonds to pay for certain capital improvements to the District's wastewater system. (3)Adjusted operating expenses exclude depreciation expense. (4)Pledge debts are Revenue Bonds. (5)The District's bond covenants require a minimum coverage factor of 150%. Source : Otay Water District Pledged Revenue Coverage (Wastewater) - Last Ten Fiscal Years (1) 0% 200% 400% 600% 800% 1000% 1200% 1400% 2020 2021 2022 2023 2024 Coverage Factor, in Percentage (%) Actual Ratio Minimum ratio 94 Net Bonded Net Debt to Net Bonded Fiscal Population Assessed Bonded Assessed Debt Per Year Estimate Valuation Debt Valuation Capita 2024 240,000 43,072,336,140$ -$ 0.000%- 2023 240,000 40,067,736,869 -(1)0.000%- 2022 228,000 36,225,223,831 722,726 0.002%3.17 2021 226,000 34,567,775,896 1,444,080 0.004%6.39 2020 226,000 32,639,341,026 2,140,435 0.007%9.47 2019 225,000 30,767,749,324 2,806,789 0.009%12.47 2018 225,000 29,387,363,297 3,458,143 0.012%15.37 2017 224,000 27,598,986,676 4,079,498 0.015%18.21 2016 220,000 26,057,698,553 4,680,853 0.018%21.28 2015 217,000 24,682,307,510 5,267,208 0.021%24.27 (1)At June 30, 2023, the General Obligation Bonds were paid off. Source: Otay Water District Ratios of General Bonded Debt Outstanding - Last Ten Fiscal Years 0.00% 0.01% 0.02% 0.03% 0.04% 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Bonded Debt Ratios, in Percentage (%) 95 Computation of Direct and Overlapping Bonded Debt June 30, 2024 2023-24 Assessed Valuation: $43,072,336,140 Total Debt District’s Share of OVERLAPPING TAX AND ASSESSMENT DEBT: 6/30/24 % Applicable (1) Debt 6/30/24 Metropolitan Water District $18,210,000 1.110% $ 202,131 Grossmont-Cuyamaca Community College District 344,425,377 14.530 50,045,007 Southwestern Community College District 739,044,345 42.729 315,786,258 Grossmont Union High School District 615,336,574 14.920 91,808,217 Sweetwater Union High School District 596,765,971 50.614 302,047,129 Chula Vista City School District and School Facilities Improvement District 270,417,000 62.255 & 31.078 145,777,514 San Ysidro School District 143,239,494 58.994 84,502,707 Other School Districts 7,057,064,915 Various 58,852,972 Grossmont Healthcare District 231,178,284 13.212 30,543,275 City of Chula Vista Community Facilities District 100,190,000 100.100,190,000 Sweetwater Union High School District Community Facilities Districts 32,697,248 19.280 - 100. 30,653,375 City 1915 Act Bonds 4,585,000 100.4,585,000 California Statewide Communities Development Authority Assessment Districts 11,268,249 100.11,268,249 California Municipal Finance Authority Community Facilities Districts 49,050,000 100.49,050,000 TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT $1,275,311,834 DIRECT AND OVERLAPPING GENERAL FUND DEBT: San Diego County General Fund Obligations $374,600,000 6.127% $ 22,951,742 San Diego County Pension Obligation Bonds 211,225,000 6.127 12,941,756 San Diego Superintendent of Schools Certificates of Participation 6,050,000 6.127 370,684 Otay Water District 100,241,590 100 100,241,590 Sweetwater Union High School District Certificates of Participation 390,000 50.614 197,395 Chula Vista City School District Certificates of Participation 167,735,000 62.255 104,423,424 San Ysidro School District Certificates of Participation 32,655,000 58.994 19,264,491 Other School District Certificates of Participation 44,406,000 Various 7,656,395 City of Chula Vista Certificates of Participation and Pension Obligations 427,540,000 69.772 298,303,209 City of San Diego General Fund Obligations 606,226,846 1.021 6,189,576 TOTAL DIRECT AND OVERLAPPING GENERAL FUND DEBT $572,540,262 Less: Otay Water District Revenue Bonds, Leases & Subscription- based IT Payables (100% self-supporting) 100,241,590 TOTAL NET DIRECT AND OVERLAPPING GENERAL FUND DEBT $472,298,672 Continued 96 Computation of Direct and Overlapping Bonded Debt Total Debt District’s Share of 6/30/24 % Applicable (1) Debt 6/30/24 OVERLAPPING TAX INCREMENT DEBT (Successor Agency): $17,015,000 18.407% $3,131,951 TOTAL GROSS DIRECT DEBT $100,241,590 TOTAL NET DIRECT DEBT 0 (2) TOTAL OVERLAPPING DEBT $1,750,742,457 COMBINED TOTAL DEBT $1,750,742,457 (3) Ratios to 2023-24 Assessed Valuation: Direct Debt ($0) ........................................................................................... 0.00% Total Direct and Overlapping Tax and Assessment Debt .................. 2.96% Combined Total Debt ......................................................................................... 4.06% Ratios to Redevelopment Successor Agency Incremental Valuation ($497,807,820): Total Overlapping Tax Increment Debt ...................................................... 0.63% (1)The percentage of overlapping debt applicable to the district is estimated using taxable assessed property value. Applicable percentages were estimated by determining the portion of the overlapping district's assessed value that is within the boundaries of the water district divided by the overlapping district's total taxable assessed value. (2)Excludes $100,241,590 revenue bonds, leases, and subscription-based IT payables supported by water revenues and backed by a rate covenant. (3)Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and non-bonded capital lease obligations. Qualified Zone Academy Bonds are included based on principal due at maturity. Source: California Municipal Statistics, Inc., and Otay Water District 97 2015 % of Total % of Total County County Employer Employees Rank Employment Employees Rank Employment Federal Government(1)(5)47,000 1 3.08% University of California San Diego(2)41,666 2 2.73% 28,341 2 1.93% State of California(1)(4)22,100 3 1.45% 40,100 1 2.74% County of San Diego(1)(5)21,800 4 1.43% Sharp HealthCare(3)19,528 5 1.28% 16,477 3 1.12% Scripps Health(3)14,686 6 0.96% 13,717 4 0.94% San Diego Unified School District(3)(5)13,453 7 0.88% City of San Diego(3)13,030 8 0.85% 10,584 6 0.72% Qualcomm Inc.(3)11,615 9 0.76% 13,700 5 0.93% Kaiser Permanente(3)7,345 10 0.48% 7,549 8 0.51% UC San Diego Health System 7,726 7 0.53% General Atomics (and affiliated companies)6,714 9 0.46% San Diego State University 6,042 10 0.41% Total 212,223 13.90%150,950 10.29% Footnotes: (1) Source: California Employment Development Department Labor Market Information (2) Source: University of California (3) Source: City of San Diego (4) Excludes education (5) In Fiscal Year 2015, the Federal Government, San Diego Unified School District and County of San Diego declined to participate in the survey organized by the San Diego Business Journal, the source previously used for rankings. Principal Employers - Current Year and Nine Years Ago 2024 98 Personal Per Capita Fiscal Income Personal Unemployment Year Population (in thousands)Income Rate 2024 3,310,700 168,809,000$ 50,989 4.31% 2023 3,369,600 168,304,000 (1)49,948 (1)3.46% 2022 3,287,300 167,801,000 51,045 4.46% 2021 3,315,400 164,786,000 49,703 8.28% 2020 3,343,400 173,279,000 51,827 6.06% 2019 3,351,800 191,558,000 57,151 3.31% 2018 3,337,500 194,633,000 58,317 3.57% 2017 3,316,200 184,260,000 55,563 4.37% 2016 3,288,600 179,717,000 54,649 4.86% 2015 3,275,500 177,300,000 53,628 5.75% (1)Estimated Figure Source: SANDAG; California Department of Finance; California Employment Development Department. Demographic and Economic Statistics - Last Ten Fiscal Years 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Unemployment Rate, in Percentage (%) 99 Department 2024 2023 2022 2021 2020 2019 2018 2017 2016 2015 General Manager 4 4 4 5 5 5 6 6 5 5 Finance 31 31 31 31 31 31 29 31 32 34 Operations 57 56 54 54 53 52 52 51 51 51 Engineering 29 29 28 26 26 26 24 24 24 24 Administrative Services 23 23 23 23 23 23 23 23 26 26 Total 144 143 140 139 138 137 134 135 138 140 Source : Otay Water District Number of Employees by Function - Last Ten Fiscal Years 0 25 50 75 100 125 150 175 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Total Employees 100 Meter Size 2024 2023 2022 2021 2020 2019 2018 2017 2016 2015 3/4" & 5/8" 44,682 44,616 44,583 44,532 44,520 44,490 44,473 44,423 44,413 44,395 1"4,719 4,562 4,389 4,284 4,080 3,680 3,235 2,800 2,756 2,674 1 ½"1,442 1,417 1,409 1,378 1,365 1,362 1,343 1,349 1,342 1,335 2"1,353 1,344 1,344 1,336 1,344 1,334 1,326 1,301 1,299 1,294 3"129 123 120 112 105 102 87 87 82 81 4"296 289 280 283 281 279 272 232 210 207 6"26 26 23 23 25 25 24 22 22 18 Others 9 9 9 9 9 9 9 9 9 9 Total 52,656 52,386 52,157 51,957 51,729 51,281 50,769 50,223 50,133 50,013 % Change 0.5% 0.4% 0.4% 0.4% 0.9% 1.0% 1.1% 0.2% 0.2% 0.3% Increase 270 229 200 228 448 512 546 90 120 163 Source : Otay Water District Active Meters by Size - Last Ten Fiscal Years 48,500 49,000 49,500 50,000 50,500 51,000 51,500 52,000 52,500 53,000 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Active Meters 101 2024 2023 2022 2021 2020 2019 2018 2017 2016 2015 Water System Service Area (Square Miles)125.3 125.3 125.3 125.5 125.5 125.5 125.5 125.5 125.5 125.5 Miles of Potable Water Main 737.0 731.0 727.0 726.0 723.0 723.0 727.0 727.0 727.0 727.0 Number of Operational Storage Reservoirs in Service 40 40 40 40 40 40 40 40 40 40 Water Storage Capacity (in Acre-Feet)672.0 672.0 672.0 672.0 672.0 672.0 672.0 672.0 672.0 668.0 Total Potable Water Connections (No. of Meters in Service)51,853 51,604 51,389 51,204 50,994 50,555 50,045 49,502 49,425 49,308 Number of Pump Stations 21 21 21 21 21 21 21 21 21 21 Number of Potable Water Valves 22,519 22,455 22,178 21,218 20,981 20,746 20,746 20,746 20,746 20,676 Sewer System Miles of Sewer Lines 88.0 88.0 88.0 88.0 84.0 84.0 88.0 88.0 88.0 88.0 Number of Treatment Plants 1 1 1 1 1 1 1 1 1 1 Treatment Plant Capacity (Million Gallons per Day)1.3 1.3 1.3 1.3 1.3 1.3 1.3 1.3 1.3 1.3 Total Flows for Fiscal Year (in Million Gallons)439 406 385 394 399 388 381 393 336 388 Total Sewer Connections (No. of Meters in Service)4,750 4,748 4,738 4,736 4,737 4,737 4,714 4,683 4,677 4,679 Recycled System Miles of Recycled Water Mains 102.0 102.0 101.0 104.0 104.0 104.0 104.0 104.0 104.0 104.0 Number of Pumping Facilities 3 3 3 3 3 3 3 3 3 3 Number of Operational Storage Reservoirs in Service 4 4 4 4 4 4 4 4 4 4 Number of Acre-Feet Storage 133.2 133.2 133.2 133.2 133.2 133.2 134.2 134.2 134.2 134.2 Total Recycled Water Connections (No. of Meters in Service)798 782 768 753 735 726 724 721 708 705 Number of Recycled Water Valves 1,527 1,526 1,468 1,522 1,506 1,497 1,497 1,497 1,497 1,492 (1) For Fiscal Year ending June 30, 2019, the decreases are a result of sewer gravity mains now maintained by the County of San Diego. Source : Otay Water District Operating and Capital Indicators - Last Ten Fiscal Years (1) (1) (1) 102 Otay Water District 2554 Sweetwater Springs Blvd. Spring Valley, California 91978-2004 otaywater.gov